Inaccurate Diminished Value Formulae
Overview
While automobile sophistication has evolved to almost incomprehensible levels of
technology, insurance policies and claims practices have changed little. The use of crush
zones, plastics, on-board computers, air-bags, special alloys, advanced structural
engineering and corrosion technologies have made modern collision repair an extremely
complex science. While the collision industry has done well to remain abreast of these
changing needs, the insurance industry has lagged behind in their willingness to
recognize the complex nature of these repairs. Unlike the insurance industry’s medical
classification of certain procedures as “experimental”, with collision repair there is no
justification for refusal to pay for known repair procedures which may restore a vehicle’s
function, appearance, safety, or value. This failure has manifested itself as a reluctance to
render a level of repair compensation which would allow shops to properly equip
themselves, train for, and consistently provide, the highest quality of collision repair
available. This widening gap between what type of repairs are currently available, and
what has been routinely provided under the terms of most insurance policies, coupled
with the staggering investment cost of a new automobile, has caused an increased public
awareness of Diminished Value.
In a “Fact Sheet” prepared by the Washington Insurance Commissioner, Diminished
Value is defined as’
“The difference in the dollar amount of what your car would have sold for without
damage, and the amount it will likely sell for with the repaired damage.”
For the last three years, Wreck Checks, Inc. has been researching, investigating, and
inspecting vehicles to determine Diminished Value, and its causes. This research has
identified three separate areas of Diminished Value as;
I.
Inherent Diminished Value
II.
Insurance Related Diminished Value
III. Repair Related Diminished Value.
“Inherent Di