Rescue Your Revenue
My Truck is Worth WHAT?!?!
Marty bought a truck last year for $75,000. It’s been a great truck, but last month a careless driver hit it. The front end sustained a lot of damage. Fortunately, it was repairable. After repairs were complete and paint was dry, Marty got to thinking about what would happen if he sold the truck. Would he still get $75,000 for it? Or would he get less since it was in a wreck?
Marty checked into it and discovered something called Diminished Value or Diminution of Value.
What is Diminution of Value?
Diminution of Value “DV” of a vehicle is the reduction of a vehicle’s market value after an accident. Many states’ laws allow for this lost value to be recovered from an at-fault driver. This damage is also often called Accelerated Depreciation.
The simplest method of calculating DV is comparing the vehicle’s value before the accident versus the vehicle’s value after it’s repaired properly. The difference between the two amounts is the diminished value a vehicle has suffered.
For example, in Marty’s case, he got an expert report showing his truck was only worth $65,000 after the accident and repairs. His truck lost $10,000 in value. Marty gave this report to the other driver’s insurance company, who paid Marty the $10,000 for the DV.
Diminished Value may be applied to all types of vehicles, including automobiles, SUVs, vans, light duty, medium and heavy-duty trucks, depending on the state. Remember this the next time any of your vehicles are in an accident.
Find an Expert to do the Valuation
It is important to work with an experienced insurance adjuster/valuation expert to determine true losses. Most qualified DV appraisers are licensed adjusters in the states where they work. Many have previous experience working in body or paint shops. This gives them a better ability to identify different types of damage and the lasting effects of the damage after repair.
I had the opportunity to discuss this matter with Sam Agan, a longtime heavy equipment adjuster with ACS Claims in Georgia. To Mr. Agan’s knowledge, there is no hard and fast formula for determining heavy equipment DV. He’s also unaware of any specific DV formulas endorsed by insurance commissioners. Therefore, it’s left to experienced physical damage appraisers to properly calculate lost value of equipment.
State laws may require a seller to disclose information about major accidents to a potential buyer. This information may include the date of damage and cost of repairs. These laws put buyer and seller on more even ground. Publications like CARFAX and others which list vehicle damage by VIN or tag number are good ways to find information on accidents.
After an accident, make sure you get a report on how much value your equipment lost. It’s best to hire your own independent expert rather than rely on the other driver’s insurance company to calculate the loss. Finally, remember to read the fine print. Make sure you are being properly paid for your whole claim, including diminished value, before signing any releases or cashing any checks.
*The information provided is for general informational purposes only and does not constitute legal advice.*
For more information on this or other legal issues, please contact:
The Law Offices of
Eckert & Associates, P.A.