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Total Loss Vehicle "Act of God" Scenario

Writer's picture: Richard TaylorRichard Taylor
Sep 15, 20211 min read

Hurricanes, tornados, flash floods, avalanches, wildfires, you know, garden variety acts of God. Do you know anyone who has hit a deer!? Acts of God can ruin your day; not to mention your automobile!


Let’s say that your vehicle is totaled in an act of God scenario, are you covered? The short answer is yes as long as your auto policy has full comprehensive coverage.


What do most people fail to do when their insurance company tenders a written Actual Cash Value (ACV) offer for a totaled vehicle? Most people fail to check if the insurance company offer is correct/fair. Unfortunately, your insurance company’s ACV settlement offer is often not accurate. If the settlement is correct we will advise you to accept the settlement and DVAC will not charge you. If on the other hand the ACV is incorrect, often off by thousands of dollars, and/or does not include accurate tax, tag and title fees, we can help. It pays to have a licensed and bonded objective third party adjuster review your total loss settlement.




 
 
 

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Understanding Automobile Diminished Value

Introduction: In the realm of automobiles, the concept of diminished value is crucial yet often misunderstood. When a vehicle is involved in an accident, its value can decrease even after repairs have been made, due to factors such as damage history and perceived reliability. This phenomenon is known as diminished value, and comprehending its implications is essential for both buyers and sellers in the automotive market.

What is Diminished Value? Diminished value refers to the reduction in a vehicle's resale worth after it has been damaged and subsequently repaired. Even if the repairs are performed meticulously and restore the vehicle to its pre-accident condition, the fact that it has a history of damage can impact its value in the eyes of potential buyers.

Types of Diminished Value:

  1. Inherent Diminished Value: This type of diminished value occurs due to the perception that a vehicle with a history of accidents is less desirable than a similar vehicle with no such history, even if repairs have been carried out expertly.

  2. Immediate Diminished Value: Immediate diminished value is the reduction in value that occurs immediately after an accident. It reflects the decrease in the vehicle's worth due to the visible damage it has sustained.

  3. Repair-Related Diminished Value: Repair-related diminished value occurs when repairs, although performed properly, are not sufficient to restore the vehicle to its pre-accident condition. In such cases, the vehicle may still have underlying issues that affect its value.

Factors Affecting Diminished Value: Several factors can influence the extent of diminished value a vehicle experiences:

  1. Severity of Damage: The extent of damage sustained by the vehicle in the accident plays a significant role. Vehicles with extensive damage typically experience higher levels of diminished value.

  2. Vehicle Age and Mileage: Older vehicles or those with high mileage may experience greater diminished value since they are perceived to have less remaining useful life.

  3. Vehicle History: A vehicle's accident history, even if the damage has been repaired, can impact its value. Buyers may be wary of purchasing a vehicle with a history of accidents.

  4. Market Demand: The demand for a particular make and model in the used car market can affect its diminished value. Vehicles in high demand may experience less diminished value compared to those with lower demand.

How to Determine Diminished Value: Determining the diminished value of a vehicle can be challenging and often requires professional appraisal. Several methods may be used, including:

  1. Comparative Market Analysis: Comparing the value of similar vehicles with and without accident histories can provide insight into the diminished value.

  2. Professional Appraisal: Hiring a professional appraiser experienced in assessing diminished value can provide a more accurate valuation.

  3. Diminished Value Calculators: Online tools and calculators can provide rough estimates of diminished value based on factors such as vehicle make, model, age, and extent of damage.

Conclusion: Automobile diminished value is a significant consideration for both buyers and sellers in the used car market. Understanding the factors that contribute to diminished value and how to assess it accurately can help individuals make informed decisions when buying or selling a vehicle. Whether seeking compensation for diminished value after an accident or negotiating a fair price for a used car, awareness of this concept is essential for navigating the complexities of the automotive market.

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