How to Determine Diminished Car Value After Accidents
Being involved in a car accident can be frightening and nerve-racking. Even if your collision did not result in any injuries, you may have sustained significant property damage.
If you have been involved in a traffic accident, you may have the legal right to pursue financial compensation. This is especially true if another person’s negligent driving caused your accident.
Most motorists are unaware that they have the option to file a diminished value claim following a crash. However, the method that insurance providers often use to determine diminished value can actually work against claimants.
That is why it is so important to secure legal representation when you’re pursuing financial recovery. If you need to know how to determine diminished car value after accidents resulting from negligence, read on.
No matter what the circumstances of your traffic collision case may be, the skilled legal team at Morgan & Morgan can help. We have decades of experience in representing the victims of negligent drivers.
Do not hesitate. Complete the easy-to-use contact form on our website to schedule a free legal consultation today. We will help you recover the money that you are owed.
What Is Diminished Value?
“Diminished value” is the term that refers to the value decrease for a vehicle following a collision. After an accident, most vehicles have a lower resale value than they did before the incident.
When you are wondering how to determine diminished car value after accidents, you must subtract the vehicle’s post-crash value from its pre-collision price. It is important to note that repairing a vehicle will not restore it to its initial value, in most cases.
Just because it has been in a collision, the value of your vehicle will probably decrease. This is known as “inherent diminished value.”
Also, determining the market value of an automobile is not an exact science. Because of this, there is room for some subjective opinion on the amount of value that the car lost.
You should not accept a lowball settlement offer from a greedy insurance provider. To avoid this, contact a knowledgeable legal expert. A skilled car accident attorney will know how to determine diminished car value after accidents caused by negligence.
Why Does Diminished Value Matter?
You may be wondering why the concept of diminished value matters or how it might affect you. If you decide to refinance or sell your vehicle, it is important to understand this concept and common methods for calculating diminished value.
Say that you want to sell your used car or truck for $10,000. You have one prospective buyer. But after the buyer learns that the vehicle was involved in a collision, they refuse to pay more than $6,000.
In this instance, the diminished value of your car from the accident is $4,000. In other words, your car or truck is worth $4,000 less than it was before the collision.
It is worth noting that diminished value does not apply to every vehicle after an accident. In fact, older cars or trucks can increase in value following the repairs needed from a crash.
But if your vehicle is newer, a car accident will result in a drop in the vehicle’s market price. In some cases, you can pursue compensation for that loss.
Securing an Independent Appraisal
When you file a diminished value claim, the insurance provider is likely to propose a settlement offer. Below, we will discuss the standard method that insurance companies use. When you learn how to determine diminished car value after accidents like a claims adjuster, you can understand how it might not benefit you.
Oftentimes, adjusters will drastically underestimate the value of your claim. Because of this, it is important to have a legal professional handling your case.
Your car accident attorney may suggest getting an independent third-party appraisal of your diminished value claim. This will give you an unbiased and objective view of the amount that your vehicle's value has decreased.
Securing an independent appraisal is not appropriate in every case. To determine if this is a good strategy for you, consult with a knowledgeable accident attorney.
How to Determine Diminished Car Value After Accidents: The 17c Method
There is no universal approach for calculating diminished car value after an accident. With that said, most insurance providers in the United States rely on a method known as “17c.”
This calculation method is not a legal requirement, but it is a very common convention. One reason for its popularity is that the 17c method usually underestimates the diminished value of a claimant’s vehicle.
Want to know how to determine diminished car value after accidents resulting in damage? Here’s what the insurance companies do:
Determine the Vehicle’s Value
There are multiple ways to secure a reliable estimate of the value of a car or truck. Some providers rely on the listing in the Kelley Blue Book.
But it is more common to determine the value of a car by using the website of the National Automobile Dealers Association (NADA). The NADA website will provide you with an accurate appraisal for the value of your vehicle.
To get an estimate from NADA, enter the following information online:
- Wheel type
If you are unsure how to categorize the condition of your vehicle, there are online questions that can help you decide.
Once you have entered information about your car or truck, the website will provide a price range for potential resale value. This number is the starting point for the 17c method for how to determine the diminished value of your vehicle.
The 10% Cap on Claims
After you determine the market value of your car or truck, most insurance companies will apply a maximum limit of 10%. This cap is known as the “base loss of value.”
Insurance providers using the 17c method assume that your car’s value will not decrease more than 10%. For that reason, they determine this figure before adjusting for damage and mileage.
For instance, suppose your vehicle is appraised at $10,000. In this case, the cap on loss in value is $1,000.
Accounting for Damage
Once the provider has calculated the base loss of value, the adjuster will account for the damage done to your vehicle using a “multiplier.” This is a number between 0.00 and 1.00.
The multiplier number is intended to reflect the severity of the damage to your vehicle. The higher the number, the more damage your car or truck sustained.
Damage multiplier standards are as follows:
- 0.00 – No structural damage or replaced panels
- 0.25 – Only minor damage to structure or panels
- 0.50 – Moderate damage to panels or structure
- 0.75 – Significant damage to the vehicle’s panels or structure
- 1.00 – Severe structural damage to the car or truck
The damage multiplier number does not have to adhere to 0.25 increments. But the higher the number is, the greater the damage is.
After the insurance provider determines the number, they multiply it by the base loss number from the previous step.
If you are unsure about how to categorize the severity of the damage to your vehicle, speak with a legal professional. A skilled traffic collision attorney will accurately determine the most reasonable damage multiplier.
Insurance providers always argue for the lowest possible number. This allows them to pay the least amount possible on a diminished value claim.
Accounting for Mileage
Even though you previously accounted for your vehicle’s mileage with the initial estimate, an insurance provider will count the mileage against the value of your claim again.
They account for mileage using a multiplier, much like the damage multiplier. However, a higher mileage multiplier will decrease the value of your claim.
Typically, mileage multiplier standards are as follows:
- 0.00 – Odometer readings of 100,000 miles or more
- 0.20 – Odometer readings of 80,000-99,999 miles
- 0.40 – Odometer readings of 60,000-79,999 miles
- 0.60 – Odometer readings of 40,000-59,999 miles
- 0.80 – Odometer readings of 20,000-39,999 miles
- 1.00 – Odometer readings of fewer than 20,000 miles
As you can see, a higher odometer reading results in a lower mileage multiplier. An insurance adjuster will multiply the value from the previous step with this number.
Common Requirements for a Valid Diminished Value Case
Not every car accident qualifies the driver for a diminished value claim. In many states, there are certain requirements for seeking compensation for diminished value.
Some of the most common requirements for a valid case include:
- The driver must own the car
- The driver must not be liable for the collision
- The car cannot have been involved in other accidents
- Your vehicle must have decreased in value
- You must assign a dollar amount to the vehicle's lost value
These are only a few examples of the types of requirements in many states. To determine whether you have a valid and strong diminished value case, consult with an experienced attorney.
A skilled legal professional will have a deep understanding of the relevant statutes in your case. They will fight hard to secure the money that is rightfully yours.
Are There Problems With the 17c Method for Calculating Diminished Value?
Yes. This diminished value calculation method usually underestimates how much a vehicle’s value has decreased.
That is why insurance providers love it. Their goal is to pay claimants as little as possible.
For instance, the 17c method penalizes you for your vehicle’s mileage twice. The initial appraisal accounts for the vehicle’s odometer reading. Then, the insurance provider applies a multiplier.
Additionally, the 17c method does not account for differences in regional auto markets. Your car or truck may be worth more than the national average because of your location.
When you call the skilled team at Morgan & Morgan, we will argue effectively on your behalf. We will fight back against unfair diminished value calculation methods and recover the money that you deserve.
Morgan & Morgan Can Handle Your Diminished Value Claim
If your vehicle was significantly damaged in an accident that you did not cause, do not wait. Contact the skilled legal experts at Morgan & Morgan.
Our compassionate attorneys know that car accident victims are often frustrated and confused about the claims process. Morgan & Morgan has successfully recovered over $10 billion for our clients, and we can get the money that you are due.
As America’s largest personal injury law firm, we have over 700 trial-ready attorneys across the country.
To schedule your no-cost case evaluation, complete the user-friendly contact form on the Morgan & Morgan website. Let our legal experts fight for you!