Is Diminished Value Covered?
The issue of diminished value (DV) has long been a great debate among insurance companies, lawyers, state courts, consumers (including activist groups), auto parts manufacturers, auto repairs shops and others. The focus on whether such losses are covered concentrates on claims that a policyholder would make to his insurer for damage to his or her own car. Answering this question is only clear from one’s viewpoint. Supporters of the DV theory say that these losses are real and should be reimbursed under an insurance policy whenever there is accidental damage to a covered car. Other groups say that such losses are similar to depreciation and were never intended to be covered. Factors affecting this debate include: • Can DV be accurately measured? • What are the financial stakes of the groups supporting each side of the issue? • Should DV be considered only when a vehicle is repaired and then sold? • How is an older car’s “pre-accident” value measured? • Should repair shops or insurers be
