What is the Difference Between Diminished Value and Depreciation?

Decline in value and depreciation are two different concepts. Depreciation is the normal decrease in the worth of a car due to wear and tear over time. On the other hand, diminished value is the actual or perceived reduction in the market value of a vehicle after it has been involved in an accident and suffered damage. Diminished value is distinct from depreciation, which refers to a fall in value over time.Depreciation and decline in value are not the same.

Depreciation is the decrease in worth of your car over time. Even if your car is repaired with the manufacturer's original parts, the value of the car will still be lower than it was before the accident.


A reduced value claim is intended to compensate for the difference between the market price of your car before the accident and its lower value after repairs have been made.Depending on the circumstances, you may be able to file a reduced value claim to help you recover the loss in value of your car, so that you can get back on track after an accident. As a general rule, you can only file a reduced value claim when the accident was not your fault.

A notable exception is the state of Georgia, where you can claim a decrease in value in both at-fault and no-fault accidents. Georgia law requires insurance companies to assess the decline in value in all car claims.Generally, if the accident wasn't your fault, you would file a reduced value claim with the at-fault driver's insurance company; it's covered by their liability for property damage. You may be wondering why you can't claim the decrease in value under your own insurance policy. Most people's insurance policies have a reduced value exclusion that indicates that they are not covered.

Comprehensive and collision coverage pays only the amount needed to repair or replace the damaged vehicle and does not cover any decrease in value.First of all, it's important to understand what exactly a diminished value claim is. The decline in value of a vehicle or your car basically means the difference between its market price before an accident and after an accident. It's important to understand that filing a diminished value claim isn't easy, even though it has simple rules and regulations; nothing is as easy as it seems.


The best way to prove your claim is to get a diminished value appraisal prepared by a licensed independent appraiser who is an expert in diminished values. You must file a reduced value claim when you have a car accident in which the other party is at fault, to recover any loss in value of your car.

In most states, you have at least two years to file a diminished value claim, but you don't want to wait until the last minute. If your insurance company denies your reduced value claim, gather documentation that shows that you are owed money.However, there can be a wide range of situations within these guidelines and you should not assume that their value has not decreased, as you could lose out on filing a claim. The nature of the damage, age of the vehicle and quality of repairs performed are all factors when calculating diminished value. You may be entitled to receive compensation from the at-fault party's insurance company for any decline in value of your vehicle.

This is another factor that can help you decide whether or not you want to file a diminished value claim.A reduced value claim is intended to compensate for any difference between the market price of your car before an accident and its lower worth after repairs have been made. The best course of action is to get an appraisal of your diminished value and file a decreased value claim. Understanding how insurers calculate diminished value will help you negotiate optimal compensation. If you drive an old vehicle or one with high mileage, you may not get anything out of a reduced value claim.Be sure to check out the laws of your state and calculate any diminished value claims accordingly.

Darrell Trimboli
Darrell Trimboli

Wannabe tv buff. Certified web scholar. Subtly charming tv maven. Avid tv guru. Hardcore beer specialist. Infuriatingly humble student.

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