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Don Jacobs
Don Jacobs
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Auto Accidents and Vehicle Depreciation

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Who among us doesn’t remember our father saying “don’t buy a car that’s been in a wreck, you just buy somebody else’s problems”. Sometimes the best advice is old advice. Would anyone pay the same amount for a car that suffered major body damage as one that didn’t? Although some body repair experts claim they can repair a vehicle to pre-accident condition, this claim hasn’t been accepted by most major auto dealers. Many will refuse to take a heavily repaired car in on trade. Others will take the vehicle but only after a significant reduction in value. Do they know something the rest of us don’t?

Maybe it’s all the pressure insurance companies place on body repair shops to use after market or used instead of manufacturer certified parts. Used or after market parts mean more profit for the insurance company, but are not necessarily good for the consumer. Many experts question the safety, reliability and longevity of after market parts. Then there is the psychological insecurity of having a car that’s suffered major body damage. People enjoy owning and driving a new vehicle. That pleasure just isn’t the same when you know the car suffered major body damage. And try selling such a vehicle on the private market. These days private buyers do their research. It’s easy to find out the history of a vehicle. All of this points to an obvious conclusion. Cars with major body damage lose value even after properly done repairs. The law recognizes this and allows consumers to recover the depreciation after repairs on top of the repair costs and rental car expense while it’s in the shop. Sometimes referred to in the trade as “diminished value”, consumers can lose thousands of dollars in the value of their vehicle after properly performed repairs are completed. The amount lost usually requires the services of an appraiser. Most reputable appraisers agree there is no one size fits all formula for the amount of depreciation after repairs. The amount lost depends on the type of car. As might be expected, luxury cars or unique vehicles suffer higher losses. An alarming trend is a practice by many insurance companies to persuade consumers there is no loss in value after repairs. They hire shady appraisers who write reports stating the vehicle has no lost value. They tell consumers they can’t recover any loss in value until the vehicle is sold. Sometimes they tell consumers the law of their state doesn’t recognize “diminished value”. These practices constitute insurance fraud, plain and simple. Millions of dollars are taken from consumer’s pockets with this practice. When they do attempt to sell their car and find out what they’ve lost in value, it’s usually too late to recover. Unfortunately, legal authorities in most states don’t appear to have any interest in prosecuting these companies. The same companies that clamor to the legislatures every year for more laws and penalties to prosecute insurance fraud by consumers, never seem to want to accept responsibility for the fraud they commit on an industry wide basis. Ironic isn’t it?

For more information on this subject, please refer to the section on Car and Motorcycle Accidents.