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NJ MVA: Diminished Value Fact vs. Fiction

  • FICTION: If your car is expertly repaired there will be no diminished value of your vehicle.
  • FACT: This is what the insurance companies would like you to believe. Even if your car has been expertly repaired, it can and will never be considered “original” or “undamaged” again and this will certainly have an impact on its resale value. A nationwide MMI survey confirmed that an accident repair history would prevent the majority (65%) of our respondents from purchasing that vehicle. This means that if you are selling a car privately, many consumers will no longer be interested upon learning your car has an accident history. Many dealers will either not want a car with an accident history on trade-in or will provide a very low offer, as most of these cars cannot be re-sold as a Certified Pre-Owned vehicle, but rather would need to be wholesaled for auction. For the small majority of consumers that would consider the purchase of a vehicle with an accident history, a large discount off of the sale price would be expected.
  • FICTION: If in an accident, you are only entitled to recover the cost of repairs for your vehicle, not for its diminished value.
  • FACT: If you are not at fault, you have the right to make a diminished value claim and recover your vehicle’s loss in value in addition to the full cost of repairs from the at fault party’s insurer. Insurance companies are very reluctant to pay settlements related to diminished value, but NJ court cases have successfully lead to 3rd party diminished value settlements.
  • FICTION: The at fault party’s insurance company will assist you with a diminished value claim.
  • FACT: Again, no insurance company will approach you about the possibility of a diminished value claim. As diminished value is a secret all insurance companies want to keep under wraps, neither your insurance company nor the at fault party’s insurer will assist you in filing a diminished value claim. You must take the initiative to file this claim with the at fault’s insurance company to obtain a settlement. As the insurance company will want to minimize loses, having an expert such as MMI on your side to provide a diminished value appraisal will level the playing field.
  • FICTION: There is a standard formula for determining diminished value.
  • FACT: While insurance companies may try and provide an unacceptable low assessment of your vehicle’s diminished value, and possibly tell you there is a standard formula that is approved for use called 17C or a derivative of this, do not accept it. As every vehicle loses value differently there is no accepted formula. The vehicle’s age, make, model, mileage and condition as well as the extent of damage suffered all play a part in determining the diminished value of a damaged vehicle. Having an evaluation by an independent, unbiased expert such as MMI is strongly recommended to determine and document the extent of your loss to the insurer.
  • FICTION: Your car had an accident history and was traded-in or sold privately, so you can no longer make a claim for diminished value.
  • FACT: Statute of limitation varies by state. In the State of New Jersey, the statute of limitations for lawsuit filing related to property damage is 6 years from the date your claim arises (date of loss), which means any legal action must be taken within that time period. Even if your car was traded-in or sold privately you can still file a claim/take legal action for diminished value in NJ within the statute of limitations. The repair records as well as documentation of the resale price of the vehicle will be needed to properly assess the diminished value. It is recommended though that a DV claim be filed as soon as possible after your accident.
  • FICTION: My vehicle must be repaired in order for me to file a diminished value claim.
  • FACT: MMI customers have been successful in recovering diminished value on vehicles that have been sold prior to being repaired. We are willing to think “outside of the box”, always looking for ways to assist our customers.
  • FICTION: My insurance rates will go up if I file a diminished value claim
  • FACT: Your insurance rates will not be affected if you file a diminished value claim as you will be filing this claim with the at fault party’s insurance company.
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