What is the core purpose of compensation for diminished value claims?

The core purpose of compensation for diminished value claims is to address reduced resale value. When a vehicle is involved in an accident and subsequently repaired, it may not retain its original value, even if the repair work is done perfectly. Diminished value represents the difference between the market value of the vehicle before the accident and its market value after repairs are completed. This claim recognizes that a vehicle that has been damaged, even if restored, may be perceived as less desirable to potential buyers, leading to a financial loss for the owner. Therefore, compensation is intended to make the owner whole by covering this specific loss in value, rather than focusing on repair costs or other unrelated expenses.