Is Diminished Value something that is covered in the state of California? My new car, 5 days old, was beat up pretty bad and repairs are being covered by the perpetrator, however, the value in the case of a resell will be less. All a potential buyer must do is look up a Carfax. Is this diminished value something that ever gets covered by insurance companies? If so, is it something I request of the agency or is it typically the result of a lawsuit?

Diminished Value, also known as diminution in value, may be requested in California however there is no assurance that an insurance company will pay out for the loss of value this accident has caused your vehicle.

Diminution in value has been defined as the actual or perceived loss in market value or resale value which results from a direct and accidental loss. Some insurance companies have added this definition in current auto policy to combat the idea that physical damage coverage included diminution in value.

There are many states that allow insurance companies to add in this language into a policy, California is one such state. When they do so it normally means that the physical damage coverage policy states within it that the insurer will pay for direct and accidental loss or damage, meaning actual physical damage done to the covered auto. This then means that loss does not apply to an indirect loss such as a loss in value, meaning the diminished value of the vehicle.

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So if you were making a first party insurance claim for your damages you would need to read through your physical damage policy coverages to see if diminished value or diminution in value was specifically excluded. Since you are placing a third party claim there may be a chance to request the diminished value of your vehicle, especially since it would be easy to determine how much of a loss of value you may sustain since the vehicle was only 5 days old at the time of the accident.

To find out if the insurance company you are working with will negotiate with you for a diminished value amount you should speak with the insurance adjuster that is working your claim. To negotiate this in you may want to start by finding out how much the car would have been worth before it was damaged and what it would be worth now. The dealership you purchased the car from may be able to help you obtain the value of the car after this accident.

If the insurance company does not want to settle for a diminished value amount, many carriers do not believe that it is automatic or inherent that an auto's value diminishes after an accident if the proper repairs by a skilled professional are made as they should, then you may want to contact a lawyer to see if they will take your case.

Most insurance providers believe the role of auto insurer is to repair or replace a damaged vehicle to pre-accident condition and the insurance coverage is not intended to guarantee the value of a vehicle before or after a repair is made. So you may have to seek legal counsel to obtain diminished value however you can first start by discussing this issue with the claims adjuster.

The California Department of Insurance may also be of help to you if you contact their consumer division to discuss your situation.