Diminished Value: Fear It or Forget It? - BodyShop Business

Diminished Value: Fear It or Forget It?

During the past year, more than 30 states have approved auto insurance policy language that excludes diminished value (DV) payments. That still leaves quite a few states up in the air.

As a shop owner, should you be concerned about DV? According to those polled in our 2000 BodyShop Business “Industry Profile,” 55.2 percent of all shop owners are concerned about DV and its effects.

Does participating in a direct-repair program (DRP) change that perception? Survey results say yes: Only 47 percent of DRPs are concerned compared to more than 60 percent of non-DRPs.

Those who are concerned cite the following reasons:

  • “Any time you have a rush job, it cuts quality.”
  • “I don’t like some non-DRP shop criticizing my body work for monetary gain.”
  • “This is another area where the insurance companies are using shop owners as scapegoats and not taking responsibility.”
  • “Pre-accident condition doesn’t call for aftermarket parts.”

Those who aren’t concerned say that if a vehicle is repaired properly, there’s no loss of value.

But can a vehicle actually be repaired to pre-accident condition? Of those respondents participating in DRPs, more than 93 percent said yes, while only slightly more than 6 percent said no.

Though the impact DV will have on the industry is yet to be determined, more than 48 percent of shop owners polled say it will have a negative effect on the industry. A much smaller group, 18 percent, think it may actually have a positive effect in the end. Still others – more than 33 percent – contend it will have no effect. Why? “If you repair a car properly,” says one respondent, “DV isn’t an issue.”

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