Vehicle depreciation after a collision

I have a 2007 Prius that was involved in a front end collision with sidemember damage.
Does anyone know how much depreciation I will have when trying to sell versus selling a car with no collision history?

Yes and no. :-) Per IRS Publication 946 (linked below), property placed in service and disposed of in same year is not eligible for regular depreciation.

Pub 946 does NOT forbid a Section 179 deduction in this case, BUT: the deduction would have to be recaptured as ordinary income in the year of disposition (see the Pub 544 link below), so the recapture would cancel out the deduction anyway. There's no reason to elect it.

What about diminished value? Would that apply to this situation?

Diminished Value Explained
Diminished Value, DV, diminution of value, loss in resale value, accelerated depreciation....it's called many things. It is the direct and actual loss or reduction in an automobile's market value due to its involvement in an accident or other event. This loss can and does occur even when a vehicle has been repaired properly.
You're looking to sell your vehicle. You have found a buyer who is looking at your vehicle and one other. The other vehicle is the same year, make, and model. It has all the same options and is the same price. The buyer looks at car number 1. The vehicle looks good and drives great. He asks if it has ever been wrecked. No, he's informed never a dent or scratch.
Your vehicle is just as clean and drives just as well. The buyer asks you if you car has ever been wrecked. Silence for a few moments, and then you say "Well...ah...ya...it was in the body shop for a little fender bender." "Nothing serious" you add.
Which vehicle are you going to buy when in that situation? I always get the same answer. The obvious answer. The only logical answer. The one that has never been wrecked.
Soon you realize that your going to have to lower your price to make your vehicle more attractive compared to the undamaged one. You have suffered a DV loss as a direct result of the accident. (note: selling your vehicle is NOT required to determine the loss in resale value)

More technically, the reason for the loss in value include



Damage history. Vehicle history reports like CarFax make it know that the vehicle was wrecked and repaired.
Voided factory warranty on the repaired area.
Missing vehicle VIN tags that cannot be replaced.
"R-DOT" decals on replacement body panels.
Increased likelihood of mechanical failure.
Impossible to duplicate immersion rustproofing techniques.
Undiscovered damage.
Increased likelihood of premature failure of bearing, seals and electrical components.
Paint that may not age or wear in a similar manner to the factory paint.
Factory assembly cannot be duplicated with an aftermarket repair.
Vehicle no longer qualifies for the Manufactures "Certified Pre-owned" program
No evidence that the vehicle's frame or unibody structure has been restored to all factory specifications, tolerances, strength and rigidity to ensure deployment of the SRS (Supplemental Restraint Systems) at the factory specified level of impact in the event of a subsequent accident.

Do insurance companies pay for diminished value, or loss in resale value?

The answer is "it depends" on the circumstances of the claim. If another driver was responsible for the accident, (third party claim) that person would owe for all of the losses that flow from the accident. This would include things like the repair cost, rental car fees, loss of use, towing, and storage, and yes, Diminished Value. Repairs will restore some value, but even high quality repairs cannot restore ALL the value for reasons stated above. A claim for diminished value can still be submitted to the at fault drivers insurer even if your own company paid for the repairs.

If, on the other hand, you are responsible for the accident, (first party claim) payment for DV and other losses is dependant on your insurance policy, and the laws and regulations of your state.

Diminished Value
Frequently Asked Questions


The inherent diminished value of wrecked and repaired vehicles has been making news and has been talked about in the insurance and automotive industry for over 15 years now.
First, some claimed that it did not exist. Then it did exist, but it was not a covered element of the loss. Then it became recoverable in all third party claims. And in first party claims, DV may be recoverable in some situations.
Insurers have tried hard to discredit the concept. Their attempts are not working. The public is educated and are demanding that insurers be accountable. Consumers are not willing to walk away leaving thousands of dollars on the table. While consumers are not profiting off of DV claims, they are being put into a pre-loss condition with payment of DV.
However, there are sill misconceptions on issues surrounding DV claims, even after all this time. Here are some of the most common questions we get.


1. The insurance company says the vehicle was repaired properly and has thus not suffered diminished value, is that true?
No. The insurance company is telling you that because they do not want to have to pay the claim. An inherent diminished value claim is based upon a vehicle being properly repaired. The vehicle is still worth less because it is not what it was before the accident. You can not duplicate a factory assembly with an aftermarket repair.

2. The insurance company says the state law doesn't allow a claim for diminished value, is this true?
No again. Insurance companies have tried avoiding paying on these claims for years and they do and say whatever will justify their position. Diminished value and case law supporting DV has been around for nearly 100 years.

3. My vehicle is more than five years old, do I still have a claim?
Maybe. Typically, vehicles that are less than five years old, without prior damage, and a decent amount of damage qualify. Any brand new vehicle with any damage no matter how small may qualify and any vintage vehicle or collector car with any damage may as well.
4. Do I really need to hire an expert to present a claim?
Yes. Without a qualified post-repair inspector you have not substantiated the claim. As the claimant you have the duty in most states to prove any claim you make and that includes diminished value.

5. Do I need an attorney?
Some of our clients submit DV claims on their own.
Often they are successful and no attorney is needed. Other times, especially with higher dollar DV claims, insurers will stall, delay and deny. Unrepresented, a claimant is no threat to the insurance company. The thing that most often prompts quick settlement of any claim including that of diminished value is the threat of litigation. Litigation costs insurance companies money. To avoid the expense they may be willing to settle. Without the threat of suit they will offer what they want and a majority of the time that will be nothing.

6. I cannot find an attorney that knows about diminished value let alone one that wants to help me out...
Many attorneys are unwilling to handle property damage including diminished value claims. Why? Maybe they are too busy, or dont know how to handle property damage claims. Maybe they feel there is not enough money there. Regardless, there are attorneys that are willing to help. Ask us. We know attorneys throughout New England that work on a contingency basis.


7. Does my vehicle need to be inspected?
An inherent loss of resale value claim does not necessarily require an inspection. Implicit in the claim is that the vehicle has been repaired properly and according to all factory recommenced repair standards. How does a post-repair expert know if the vehicle has been repaired to this level if the vehicle has not been inspected? He can't. We believe that a personal inspection by a qualified expert is in your best interest.

8. What if the post repair expert finds poor repairs or work that was never performed that should have been?
Though every case is different we recommend giving the shop that did the original repairs the opportunity to right the wrong. You may have a claim for repair related diminished value in addition to the inherent loss if the car is not eventually repaired properly.

There are several companies that handle Diminished Value. I work for one if you have questions let me know.

It can be beneficial to have an attorney assist in recovering diminished value on your car. I'm working with one on a diminished value claim on my 2011 BMW. Diminished value claims in Connecticut have a two year statute of limitations. If you're in Connecticut and have questions or need a referral to a diminished value attorney, let me know.

Thanks for all the good info Bob. I just found out about "diminished value" recently when I wrecked my 08 MDX...If you live in NC like I do, look up "diminishedvaluecarolina" they're legit, they did my report same day I contacted them. Hope this helps :)