Posted On: August 27, 2007, 1:36 pm CDT

Posted By: Ratemaker

Maybe there is a real loss in value, but it is a loss in value that is impossible to quantify in most situations.

A diminished value loss relies on perceived information in a fair-market-value transaction that may or may not take place. If that transaction does not occur, the diminished value cannot be determined. Even if it does occur, the "pre-crash" value of that particular vehicle is not readily available. (Yes, I know blue books exist, but find me an insured who won't say his vehicle was in "above average" or "excellent" condition.)

The bottom line is, if a loss can't be valued, it can't be insured. I would argue that diminished value losses fall into that category.