Diminished value refers to the difference between the worth of your vehicle prior to an accident and what it’s worth after the event takes place. Depending on the make and model, the amount of diminished value can be significant. In order to understand how it matters, it helps to have come idea of how that car diminished value will affect you in the future. Here are some examples to keep in mind.
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The Impact of the Damage on the Car’s History
There’s no doubt that an accident changes things permanently. Even if the repairs are made using original parts and the quality of the work is outstanding, the car will never be exactly the same again. The same can be said for the car’s history.
From this point on, that history will include basic information about the nature of the damage. It will also have an impact on how much trade-in value the car carries when you decide to get something new. Understanding how much value was lost will help you set reasonable expectations about how others will view the vehicle in terms of monetary worth.
The Necessity of Disclosing The Car’s Accident History to Prospective Buyers
Suppose you decided to sell the car outright. Did you know that you are required by law to disclose everything that you know about the vehicle? That includes any damage that was done during the time that you owned it.
With the appraisal that helps to define the diminished value, it’s much easier to satisfy the legal requirement of disclosing what took place. At the same time, you can use the appraisal results to demonstrate why the price you’re asking is a fair one.
A Change in the Status of Your Vehicle’s Classification
Prior to the accident, your vehicle was most likely classed as a certified pre-owned vehicle. This involves assuming that it’s been maintained properly by a certified service provider and everything is up to date. Once the car is damaged in an accident, that status disappears. Your vehicle is now considered a used vehicle that has sustained damage.
The appraisal that provides the car diminished value attests to this change in status. It can have some impact on everything from the way the local jurisdiction assesses taxes on the vehicle to how you can market it when attempting to sell the car or truck. Knowing the difference can help you avoid making statements that lead prospective buyers to think the car is something other than what it is.
The Value of the Vehicle and Securing Adequate Insurance Coverage
The diminished value also helps when you’re seeking to secure adequate insurance coverage for your car or truck. That change in status will impact the premium and may have some bearing on the scope of coverage the provider is willing to extend. By knowing that value yourself, it will be easier to decide if the coverage offer is sufficient.
This can also help you decide whether stated value or agreed value coverage would be best in your case. The one that’s right is the coverage that allows you enough benefits to replace the car if it is totaled in the future, while also ensuring you can more easily manage the premiums.
Once an accident occurs, there’s no going back. The most practical solution is to find out what the diminished value happens to be and identify ways to make it work to your advantage. While your efforts will not likely offset the entire loss in value, having the figure in hand can make it easier to keep the loss at the lowest level possible.
