It has been written that Inherent Diminished Value damages represent an intangible loss in market value rather than physical damage to tangible property. All research shows that cars with accident histories are worth less than comparable cars that were never wrecked. We are at the point where tangible and intangible intersect.
Inherent Diminished Value refers to the loss in a vehicle’s market value that occurs after it has been involved in an accident and subsequently repaired, even if the repairs are done perfectly. The key point is that this loss is intangible because it’s not related to any remaining physical damage but rather to the perception of decreased value due to the accident history.
Buyers typically prefer vehicles with no accident history. This preference is reflected in lower resale values for cars that have been in accidents, even if they’re fully restored. Vehicle history reports like Carfax or AutoCheck make it easy for potential buyers to identify accident histories, reinforcing this market trend.
So, while the car may be physically restored to its pre-accident condition, the stigma of the accident affects its resale value, which is what inherent diminished value compensates for.
However, this intangible loss is influenced by tangible factors such as accident reports from Carfax, AutoCheck or other visible repair history, which create objective evidence of the accident. These reports don’t cause the damage themselves, but they document the history that leads buyers to assign less value to the vehicle.
While the market’s reaction is based on tangible evidence, the loss itself—the diminished willingness of buyers to pay the same price—is intangible because it’s rooted in perception, not physical degradation.
Inherent Diminished Value is an economic reality based on buyer behavior, even though the car’s functionality might be unaffected. Why is economic reality not considered tangible evidence?
Inherent Diminished Value claims claims can be challenging in insurance disputes—because while the evidence is clear, the loss relies on subjective valuation. It’s fair to argue that the loss feels tangible because it’s both provable and measurable—two characteristics typically associated with tangible damages. The line between tangible and intangible isn’t always clear-cut, especially when economic realities make intangible losses feel very real.
A fair solution lies in creating a framework that acknowledges both the objective, measurable nature of the loss and its classification as an intangible, perception-based impact.
- Objective Evidence: Recognize that accident reports, repair histories, and expert diminished value appraisals are tangible forms of evidence that substantiate the claim.
- Subjective Impact: Accept that while the loss stems from perception, the market’s reaction to the tangible evidence causes a real, measurable financial loss.
This dual acknowledgment ensures the loss isn’t dismissed as too subjective while still respecting its nature as an “inherent” value issue. Legislation could clarify that Inherent Diminished Value, while intangible in nature, is compensable based on tangible evidence and measurable loss.
- For the Claimant: Provide tangible evidence—a report from a state-licensed adjuster or appraiser is the most accepted credential.
- For the Insurer: If disputing the claim, insurers should be required to present counter-evidence rather than simply denying claims based on subjective arguments.
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