Let me give you a scenario. Let’s pretend that for some reason, your car got involved in a nasty pile-up, and is now going through a lot of repairs. I do mean, a lot – we’re talking an engine replacement, massive hood reconstruction, and don’t even get me started on the car’s underbelly. Somehow, your car is now back to its old, beautiful self, and you decide to sell this car. What are some auto insurance concerns that could come with this unique scenario?
There are two thoughts on this matter – diminished value and betterment. Let’s pretend that someone else did buy your car, and soon realized that it had gone through lots of repairs. This is something that your buyer could actually take to his or her auto insurance company and press for this claim. This is how Diminished Value works.
On the other hand, should the auto insurance discover the car was pre-loved and repaired, they may also argue that an increase in your buyer’s dues is in order, as the car actually got better and increased in value. This is now what we call Betterment.