Bad Things Happen in Threes – A Complicated Diminished Value

diminished value

As it so often happens the excitement of a new car quickly turns sour when you’re the victim of an accident, especially when it’s not your fault. It seems, new cars are magnets for such accidents. Then to top it all off, next month you’re involved in another fender-bender, totally, once again not your fault. Now comes the third bad thing… dealing with the insurance company. Bad things happen in threes.

This was the scenario a recent client of ours faced. Thankfully, they were dealing with the same insurance company for both accidents, which made things a little easier. Well, easier as in trying to put a square peg into a round hole, insurance companies do not like Diminished Value claims.

The Client came to us after the second accident, when she first heard about Diminished Value. She began by entering her information into, and creating her account. It was through our initial conversations with her that we learned the whole story and first accident a month before. She had been told by the insurance company that because her car was fixed to “as-new” condition she wasn’t owed Diminished Value for the first accident. This is the classic insurance company line, which is simply not true.

We had the client adjust her first claim in reflecting the values from the first accident. Let’s say she had a $30,000.00 car with $5000.00 worth of damage. After entering her information in to it told us the Diminished Value was $3500.00. So her car was now worth $26,500.00 even after it was fixed to “as-new” condition because of the accident.

This is where it becomes complicated with the second accident. She had to create another case in for the second accident. Where, she entered the details of the second accident, including the damage amount from the first accident into the new case. then calculated the diminished value based on the reduced value from the first accident. So in effect for the second case it had to calculate the first case, and then calculate the second diminished value based on the value of the car after the first accident.

Basically after the first accident, her car was worth $26,500.00 after it was repaired. If she had $3000.00 damage in the second accident, the diminished value would be calculated from $26,500 with $3000.00 damage giving a diminished value of $2500.00 or a vehicle value of $24,000.00.

So it looks like:

First Accident – $30,000 Value with $5000.00 Damage = Diminished Value of $3500.00 or a vehicle value of $26,500.00.

Second Accident – Vehicle Value $26,500.00 with $3000.00 Damage = Diminished Value of $2500.00 or a vehicle value of $24,000.00.

Basically in a span of 2 months she had lost $6,000.00 in diminished value, even though her car had be fixed to “as-new” condition.

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