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The actual cost of repair is frequently the smallest element of damage following a motor vehicle accident

Anyone who has suffered damage to a motor vehicle that is less than a total loss has incurred damage far more than the cost of repair. That damage is the diminution (or loss) in value of the motor vehicle by reason of having been involved in an accident, even if it has been repaired to “better than new.”

Diminution in value is strictly a matter of supply and demand. Would you rather purchase a vehicle that has been involved in an accident or an identical vehicle that has not been in an accident? The answer is obvious. As a result, the market value for the previously damaged vehicle is reduced. Depending upon the vehicle involved, that diminution can represent between 10% and 35% of the fair market value of the vehicle. Diminution is not a new concept and has been recognized as an element of damage in Indiana and many other states. However, with the advent of the internet and services such as Carfax®, the history of each and every vehicle is now widely known.

Even a minor incident will be reflected on the car’s history and result in a reduction of the fair market value of that motor vehicle. A more significant collision resulting in the deployment of an airbag will likely result in a significant diminution in the value of the vehicle, even after a complete repair. The car will be flagged on a Carfax search, and, in many instances, will not be available to be “Certified” by the manufacturer for a special used car warranty. The result is that if you attempt to sell your vehicle on the internet, it will not be competitive against similar vehicles without an accident history unless you lower the price. If you attempt to trade in the vehicle or sell it outright to a dealer, the wholesale value that you receive for the vehicle will be based upon a vehicle with a damaged history.

How can you be compensated for this “phantom loss”? You can be assured that the insurance company, whether it is your own or the company for the other driver, will only offer to fix your vehicle. It is incumbent upon you to establish the fact that your vehicle following repair is not worth what it was before the repair and to make a claim for that diminution in value. We are experienced in handling such claims and have experts available to us who know how to calculate the loss in the fair market value of your motor vehicle as a result of a collision. Do not hesitate to call one of your attorneys if you would like our assistance.

Eric N. Allen