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Diminution

Diminution Claims

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What is Vehicle Diminution?

Vehicle Diminution refers to the loss in value of a motor vehicle after it has been involved in a Road Traffic Accident. In effect, it is the loss in market value of your car as a result of the accident, as unfortunately even if a car is fully repaired after sustaining damage, you will find that it is worth much less when you eventually go to sell your car. This loss of value is very different to normal vehicle depreciation and would not have occurred had your car not been involved in a collision.

You can claim for Vehicle Diminution to recoup the loss in value in compensation against the insurers of the vehicle which caused the accident.

Car accident

 

The history of Diminution

Vehicle Diminution has been accepted in law for a number of decades now.  All the way back to 1974, the Court of Appeal deemed 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 on the purchase of the one that has a repair history.

The case of Payton –v- Brooks (1974), heard in the Court of Appeal, sets out that a claim can be brought for Diminution caused by a vehicle having been repaired.

The summary is that if the full cost of the repairs to the car is not enough to cover the financial loss to the owner, there is no reason the owner should be deprived of additional compensation under that head of damage also.

Another very important case was called Coles -v- Hetherton (2013). This case determined that the financial loss to a vehicle owner is realised as soon as the vehicle becomes damaged. The loss sustained is not simply the cost of the repairs, it is Diminution. The cost of the repairs to put the vehicle into its pre-accident condition is simply a contribution towards the Diminution. The Courts can award a sum of compensation which is greater than the cost of the repairs if they feel that the case justifies it.

 

Diminution graphic - car crashDiminution graphic - expert repairDiminution graphic - just like newDiminution graphic - declined in value

 

The statistics

A recent survey conducted by Oakwood Solicitors showed that only 9% of car buyers would buy a vehicle that they knew had previously been involved in a car accident and had repair work carried out on it.

The survey of 2,087 people also showed that buyers between 18 and 34 years of age were most likely to buy the previously damaged vehicle, whilst older buyers would appear to be wary about such a proposition.

A more astonishing statistic is that when potential buyers gave a hypothetical purchase figure on a vehicle they had been advised had sustained some accident-related damage and been repaired, on average they would pay 24% less for the damaged car, meaning that the seller is out of pocket.

This diminution in value can be significant for some owners who believe that their beloved car is still worth the full book value, but as we have found out from our survey, this isn’t the case.

Many thousands of people in the UK have lost money as a result of unclaimed Vehicle Diminution following a car accident.

 

Diminution statistics - only 9% buy a repaired carDiminution statistics - most people pay 24% less for a damaged car

How long do I have to be able to start a claim?

A claim must be brought within six years of the accident which caused the damage.

Can the owner of any sort of car make claim?

It is often thought that only classic, rare or prestigious vehicles are likely to qualify for a Vehicle Diminution claim, Oakwood Solicitors Ltd has been able to settle a large number of matters for the owners of less valuable vehicles, and this has also been accepted by the Courts.

To qualify for a claim for Vehicle Diminution, we would expect the vehicle to be no more than five years of age (unless it falls into the classic or desirable/prestigious bracket) and have sustained damage costing over £3000 to repair. The larger the market value and desirability of the car, the higher the compensation award is likely to be.

Can a second, third or fourth owner make a claim (without knowing the previous accident history)?

Although there are no known binding authorities on this point, our view is that all vehicles are likely to sustain some degree of Diminution if they have been involved in an accident of a reasonable magnitude.

There is a possibility that if a vehicle has a large number of keepers, some of them could have been a trader or dealer. The vehicle would therefore be less likely to have been involved in an accident.

It would be the responsibility of the motor engineer compiling the necessary evidence to support the claim for loss in value to take this in to account and determine if there was any evidence of historical damage and repair work.

Can I claim for Vehicle Diminution if my car was a total loss?

Vehicle Diminution does not apply if the car has been deemed uneconomical to repair. The theory is that once a total loss payment has been received, the owner has been put back into the position they were in before the accident occurred. They will have received the market value of the car prior to the accident which means they can go out and purchase a like for like replacement vehicle.

Why can’t I recover this loss in vehicle value from my own insurers?

A standard, fully comprehensive insurance policy will not cover the loss in value. Vehicle Diminution is classed as an ‘uninsured loss.’

Insurance policy

 

Will it affect my insurance if I put in a claim?

The claim will be made against the insurers of the driver who was to blame for the collision. Any payment of compensation will be sought from them, so a Vehicle Diminution claim should have no bearing on your own insurance.

What if I was at fault for the accident?

Unfortunately, if you were at fault for the accident, you will not be able to make a successful claim for Vehicle Diminution.

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

This argument was rejected by the Inner House of the Court of Session in Hunter v Thomson and another. The Sheriff Principal in that case refused to accept 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 financial loss.

The case of Coles v Hetherton (2013) is also a good authority to rely on when arguing that the loss is realised when the damage to the vehicle has occurred.

What should you do to ensure that you recover the most compensation, as quickly as possible?

  • You should take the full details of the driver at fault for the accident. This should consist where possible of full name, address, phone number and vehicle registration.
  • You should try to take some photographs of your own vehicle in its damaged condition.
  • Try to ensure that your car repairs are carried out at a reputable, approved repairer.
  • Ensure that your vehicle is returned to you from the repairer in a good condition and that you are satisfied with the quality of the repair work. If the car has been repaired to a poor standard, it makes it very difficult to assess the loss in vehicle value.
  • If possible, you should request a copy of the repair documentation from the body shop or garage. This should include any repair estimate and reports. Invoices should include a list of all parts and labour work carried out.

The evidence

When submitting a claim for Vehicle Diminution to the third party insurers, it is likely that they will want to see evidence of the loss in the form of engineering evidence, provided by a qualified motor engineer. This will involve a review of the repair documentation and an inspection of the fully repaired vehicle.

Man appraising car damage

 

Is it necessary to get a physical inspection of my vehicle carried out?

Although it is not impossible to obtain a “desktop” engineers report and submit a claim for Vehicle Diminution, it can create difficulties because without a physical inspection of the vehicle, the engineers report will be based on second-hand information (the repair documents) and it would also bring in to question how the engineer has determined a true and accurate market valuation of the car.

A desktop report without a physical inspection is likely to result in a report being open to criticism and the Courts may even not accept it as a loss that can be substantiated. We would therefore always recommend that a physical inspection is carried out if you wish to pursue a Vehicle Diminution claim.

 

When is the right time to get an engineer’s report?

A Vehicle Diminution value can only be determined once the owner knows that the vehicle repairs have been carried out to a commercially satisfactory standard. If there has been additional undiagnosed damage requiring further repair work, then the value of the Vehicle Diminution claim could be affected.

You may also find that the insurers of the third party insurers try to argue that the repairing garage was to blame for the loss in value due to incomplete or unsatisfactory repair work. It is therefore important that you are satisfied that the repairs have been completed to a reasonable standard before an engineer is instructed to inspect the vehicle.

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

Whatever the claim involves, there are always going to be some cases that insurance companies are not prepared to settle. This may be for several reasons. From our experience, most cases are settled through proactive negotiations. On rare occasions, Court Proceedings may be necessary so that a Court Order can be obtained which confirms that the insurer must pay damages to the Claimant.

Why do I need a Solicitor?

Although Vehicle Diminution has been around for some time, it is not a very well known and understood area of law. Insurers realise the impact that a number of claims would have on them financially if everyone who could claim, did claim. As such, they will try to avoid settling claims wherever they can and for the unrepresented Claimant, this can prove to be extremely difficult and stressful to overcome.

Why use Oakwood Solicitors?

Members of our Road Traffic Accident Department have been very well trained to know what to look out for and how to respond to specific arguments from third-party insurers. We work with experienced engineering firms nationally and have access to Barristers who have appeared in Court to represent Claimant’s pursuing Vehicle Diminution claims. We strive to ensure that our clients recover the highest level of compensation possible. Oakwood Solicitors has a highly successful track record of recovering compensation for many clients, and are happy to conduct an initial FREE assessment of your claim.

We work on a no-win no-fee basis and our fees are based on a deduction from our clients’ compensation. This means that we are incentivised to ensure that we obtain the maximum possible level of compensation for our Diminution clients.

Case study

Oakwood Solicitors was asked to represent by Mr. M of Bolton, Lancashire in order to pursue a claim for Vehicle Diminution.

Mr. M’s 2018 plated Audi S5 motor vehicle which was stationary at a set of traffic lights when a third party vehicle collided with the rear of his vehicle which subsequently pushed his vehicle into the rear of the car in front. Mr. M’s vehicle sustained moderate damage totalling £9412 including VAT.

The vehicle had been repaired to a good standard by an approved Audi repairer and Mr. M. had reported no ongoing issues or concerns with the car. The vehicle had been purchased from new, had not previously been involved in any other accidents, was well maintained with fairly low mileage for its age.

Liability for the accident had been admitted by the third party insurers.

At our instruction, specialist engineering evidence was obtained following a physical inspection, and the claim for Vehicle Diminution was assessed at £3340.00.

The claim was submitted to the insurers of the fault driver who proceeded to negotiate a settlement and an agreement was reached to pay Mr. M the sum of £3150 in satisfaction of the claim.

The claims process was resolved within four months of instruction.

Customer Satisfaction Concepts on Chalkboard Background

Testimonial

“Oakwood Solicitors has been a huge help in retrieving losses incurred in a road traffic accident. As with most car accidents, there has been a lot of stress and financial loss especially when a new car has a large amount of damage. A nice chap Rob was able to retrieve some of these losses from the third party which helped me greatly in this case. I’m very grateful for their care, organisation and tenacity.”

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