Sunday, October 24, 2010

Diminution in Value

Here is the first in the series of hopefully useful information for you who are leaning two out there. I know I have caused a stir a few times with this one when I informed someone of this. Heck, one such case involving a friend of mine had his co-workers laughing behind my back telling him I was full of shit. He called his insurance company and they even scoffed at him about it saying they'd never heard of it. His agent had been in the business for fifteen years and brushed him off. At my insistence he kept bugging them and his co-workers kept on telling him I was , ya know..., full of shit. That is until his determination and leg work yielded a $2000 check in addition to getting his vehicle repaired here in North Carolina.

Diminution in Value: The difference in resale value of a vehicle after repairs have been made.  Basically this pertains to the difference of fair market value of your vehicle immediately before an accident and immediately afterwards of the accident. Say your motorcycle was worth $14000 before somebody backed over it in a parking lot, or Grandma turned left in front of you and you t-boned her car, even after repairs have been made to right the damage, your motorcycle is now worth only 75% of what it was pre-accident,or $10,500. So if you decide to later sell the motorcycle you have to tell the potential buyer that it was involved in an accident by law. Even though it was repaired and made close to pre-accident condition, fact is it has lost value from what the value was had it never been damaged. So the insurance company of the person who caused the damage is responsible for providing this difference in value to you.
This is also why it is important for you to document and have receipts for any upgrades you may have done or had done to the motorcycle before the accident that would have raised it's value before an accident occurs. And that you inform your insurance of any of these upgrades that adds value to the motorcycle. Otherwise the insurance companies will base their value on the as manufactured and delivered from the factory value guide.

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