Loss of Value or Diminished Value (also known as loss of value or Diminution in value or DV) is the difference in the market value of a vehicle without an accident history and the market value of the same vehicle with an accident history.

In most situations if a car has been in a severe accident previously it lowers or depreciates the value of the vehicle. Loss of value or diminished value is thus basically the difference of what your car was worth pre-crash and then post-crash.

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 includes diminution in value or the depreciation of your vehicle's value after an accident.

So as you are likely aware diminished value has to do with the fact that a car that has previously been in an accident and repaired tends to fetch less money at the time that it is sold then a motor vehicle that has not been in an accident or had repairs due to dents, scratches, etc.

Consumer advocates have held the belief that policyholders are entitled to monies for diminished value from their insurers if they can document that their vehicles have not been returned to pre-accident condition.

Insurance Services Office (ISO), which provides insurance forms and data to insurance companies throughout the US, has authored policy language that insurers can now use in most states that allow for it (45 states and Washington, D.C. to the vest of our knowledge), that has the insurer exclude payments for diminished value claims.

State laws and court rulings on diminished value are on-going however from our latest research the ISO's exclusion for diminished value has NOT been approved in Georgia, Hawaii, Kansas or Maryland. Massachusetts has not adopted ISO policy language, but in 2002 the Massachusetts department of insurance stated that diminished value was not covered under collision policies in MA.

If you are trying to see if diminished value is available to you as a first party claim, read through your policy and see if it there is specifically an auto exclusion endorsement that lists language that allows your insurer to deny diminished value claims.

While you have a contract with your own insurer and thus they can exclude your request for diminished value, if someone else hit you and damaged your car so that you could make a third party claim and request monies for the diminished value of your vehicle if your state law so allows.

The ISO's diminished value exclusion form applies only to first party physical damage claims, not to third party liability claims. Also, in tort claims, the measure of damage is generally calculated as the difference in value before and after the loss, sometimes making diminished value a viable claim. However, there is still a wide variation among state case law in pinpointing when a third party claimant is entitled to diminished value.

One state that does allow diminished value claims is Georgia. The GA Insurance Department states that Georgia courts have said that a person's damage is the difference in the value of that property (automobile) before and after the accident. The courts have said that efficient repair of any vehicle damaged in an accident may not have returned that vehicle to its pre-accident condition. This has generated an upsurge in diminution in value losses and claims.

Per the instruction of GA courts, the determination of diminishment for first party claims must be done by the carrier at the time they estimate cost of repairs of vehicle damage. Such determination could result in evidence of no diminishment.

So it is up to state laws and insurance policy terms to determine if diminished value will be paid out or not. Most states do not require it to be paid out. States may have laws that allows DV, does not allow it or no real law so court cases decide about the requirement for diminished value claims if an insurance company and a car owner cannot come to an agreement on their own.

As for how DV is calculated, it too varies depending upon state laws and insurance company's guidelines. In general you can try to determine diminished value on your own by seeking information from a dealership on what the value of your vehicle would have been before the accident that damaged it and then what the value would now be with the damages it suffered, even if repaired properly.

Some things taken into account when trying to calculate diminished value are: the overall condition of the vehicle prior to the loss, the amount of damage, the type of damage, the extent of the damage, and the damage area. Accident or repair related loss of value can be assessed through an inspection of the vehicle by a qualified mechanic or post-repair inspector.

If you are trying to make a diminished value claim you can contact your state's insurance regulator to see if there are state laws pertaining to DV and any consumer advice on how the calculation for it should be made. You can also contact an auto dealership to get an idea of what you will expect the loss of value to be for your vehicle.