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Diminished Value Claims in Texas

Posted on January 31, 2023

After a car accident, your vehicle might diminish in value even if it can be repaired to its original condition. Therefore, Texas allows drivers to file diminished value claims when a collision puts a dent in their vehicle’s resale value.

What is a Diminished Value Claim?

Diminished value is defined as the loss of a vehicle’s value after it has been repaired due to an accident or defect. Even the most reputable body shop cannot restore a car back to factory condition. As a result, you have the right to file a diminished value claim if you believe a purchaser will not pay as much for your car that has been repaired as they would for a similar vehicle that did not require repairs.

How to File a Diminished Value Claim

If you are involved in a car accident in Texas, you have the right to make a diminished value claim against the at-fault driver’s insurance company. To qualify for compensation for diminished value, the following elements must be present in your claim.

  • You must own the car and/or make payments (not leasing it).
  • You must not be at fault for the accident.
  • Your vehicle must have lost value.
  • Your car’s lost value must be assigned a dollar amount.
  • Your car must not have been in any other collisions.
  • The other driver cannot pay for your car’s diminished value with their property damage coverage.
  • The insurance company must allow the recovery of a diminished value claim.

On the other hand, if you caused the crash, you may be able to seek compensation for the diminished resale value of your vehicle from your own insurance provider, depending on your coverage. However, your insurer may only cover the repairs necessary to restore your vehicle, as diminished value claims are only paid in very limited circumstances.

Types of Diminished Value Claims

There are several types of diminished value claims:

  • Immediate Diminished Value: This claim refers to the difference in the resale value of your vehicle immediately before the accident and after, prior to being repaired. As insurance policies tend to cover most damage repairs, this type of loss rarely plays a role in diminished value cases.
  • Inherent Diminished Value: Even if repairs restore a damaged car to perfect condition, it may have a diminished resale value due to its accident history. Buyers will believe the vehicle is less valuable because of past repairs.
  • Repair-Related Diminished Value: Low-quality repairs can have a drastic impact on the resale value of a car. For instance, if the paint job is restored using a color that isn’t an exact match or parts are replaced with cheaper components.

The most common type of diminished value claim is for inherent diminished value.

Negotiating a Diminished Value Claim

Your ability to recover fair compensation for a diminished value claim heavily depends on how negotiations go with the at-fault party’s insurance company. Before accepting a lower settlement than your claim’s worth, speak to a Waco accident attorney.