Loss-of-Value
(by David Maloney) A determination of the loss-of-value (also referred to as diminution of value) of damaged personal property is frequently required in order to arrive at a fair and timely settlement of a transit-related or casualty loss damage claim. Yet there is no task more onerous to the appraiser than attempting to assign a loss-of-value to an item of personal property which, having suffered damage, has been professionally repaired. Damage could be transit-related such as might occur during a household goods shipment, or damage could be caused by flood, fire, earthquake breakage, in-home accident, vehicular accident or some similar casualty. In any of these scenarios, the appraiser might be asked to offer an opinion of loss-of-value.
Loss-of-value is an opinion of the amount of value that an item of personal property has lost due to it having been damaged and taking into consideration the quality of subsequent repairs or replacements. (A “replacement” is simply a substitution, e.g., original drawer pulls might require replacement with new pulls if one of the originals is broken and cannot be repaired; or an old marble dresser top might require replacement with new marble if the original was broken during a move.)
Loss-of-value reflects the reduced level of marketplace acceptability of the damaged albeit repaired item. It can be thought of as the amount a seller would have to discount the asking price of a professionally-repaired item in order to induce a sale to a knowledgeable buyer. Mathematically, loss-of-value equals the difference in market value prior to damage and the market value after the damage has been repaired.