Vehicle Diminution – What you need to know

What is Vehicle Diminution?

Vehicle Diminution is a claim for the loss in value of a vehicle after it has sustained damage and been repaired. The financial loss is assessed based on the pre-accident market value of the vehicle, compared to its value on the open market after the repairs have been carried out.

Putting it simply, a repaired car is less desirable than an unblemished vehicle, and as such will attract a reduced sell on value.

Why can I claim for Vehicle Diminution?

The Law states that you can! It was accepted as long ago as 1974 that if a potential buyer is considering two identical cars, one of which is unblemished and the other with a history of repair work, the buyer is likely to choose the unblemished car, or expect a discount.

The case of Payton –v- Brooks, heard in the Court of Appeal, sets out that a claim can be brought for Diminution caused by a vehicle having been repaired.

Will I only be able to claim when I come to sell the vehicle?

Although some insurance companies will try to argue this, it was rejected by the Inner House of the Court of Session in Hunter v Thomson and another where the Sheriff Principal rejected the argument that the Court could not be satisfied on the balance of probabilities that there was any Diminution until the car had been sold on at a loss.

In the case of Coles v Hetherton the Court found that the loss occurred immediately at the time of the accident so could not be mitigated by having the vehicle repaired at a lower cost. This case is widely relied upon and rarely overlooked when arguing that the loss is realised when the damage to the vehicle is sustained.

Do I need to get a physical inspection of my vehicle carried out?

In theory, if the vehicle damage reports and repair documentation is thorough and provides substantial information from a qualified engineer, it would be possible to rely on a desktop report to evaluate the level of Diminution that has been sustained.

That said, the lines can become very blurred with this because without a physical inspection of the vehicle, the Diminution report will be based on second-hand information and the reporting engineer will not be able to confirm that they have based the valuation for Diminution on their own first-hand examination.

For example, the level of financial loss incurred due to Diminution is affected by many things including the condition of the vehicle prior to the accident and whether it has been involved in other accidents or not.

Without a physical inspection of the vehicle, how can an engineer possibly conduct a report that will need to be signed by a statement of truth, confirming what the condition of the vehicle was?

A desktop report, therefore, leaves the evidence open to criticism and the Courts may even not accept it as a loss that can be substantiated. We would, therefore, recommend that a physical inspection is carried out if a Vehicle Diminution claim is to be pursued.

When is the right time to get a report?

Vehicle Diminution can only be assessed once the owner knows that the vehicle repairs have been carried out to a satisfactory standard. If there has been further undiagnosed damage that requires additional repairs, then this could affect the value of the Diminution claim.

It may also be that the insurers of the responsible party try to argue that the repairers are responsible for the loss in value due to incomplete or unsatisfactory repair work and therefore you must ensure that you are happy that the repairs have been completed to a reasonable standard before proceeding.

What if the third party insurers refuse to settle the claim?

There are some cases where insurance companies refuse to settle the claim. This might be based on some County Court level decision, or an argument that no loss has been incurred until the vehicle has been sold.

From our experience, most cases are settled through negotiations. In rare circumstances, Court Proceedings may be required in order to obtain a Court Order that damages are paid to the Claimant.

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