How to File a Diminished Value Claim - morgan and morgan
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File a Diminished Value Claim

How to File a Diminished Value Claim

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File a Diminished Value Claim

Car accident victims can be entitled to compensation for their injuries, expenses, and car damage if another is at fault for their accident. However, they could also potentially recover an amount for the diminished value of a car due to an accident.

Potential buyers tend to shy away from an accident car, even if it was completely repaired. Moreover, anyone shopping for a used car can easily check a vehicle’s accident history on the internet. Therefore, sellers of an accident vehicle could stand to lose considerable amounts when it comes to selling. We believe that this is an unfair result, especially if the accident wasn’t the fault of the car owner. 

If your car’s value has dropped after a car accident, Morgan & Morgan can advise you on how to file a diminished value claim. Get started now and contact us for a free consultation.

What Is Diminished Value?

Diminished value refers to a car’s decrease in value after an accident. According to the Insurance Information Institute (III), a vehicle involved in a significant crash typically has less resale value than the same vehicle that was never involved in an accident. This holds true even if the accident car is repaired to the highest standards without any visible indicators that it has ever been in a collision. According to most states’ laws, you could be entitled to compensation for the loss of your car’s value.

Types of Diminished Value

Diminished value car insurance claims generally fall within one of the following three categories: 

Inherent Diminished Value

A car loses value simply by being damaged in an accident, even if it is subsequently repaired to a high standard. Inherent diminished value is the most common type of claim and refers to the difference in value between the vehicle before a crash and after a collision and good-quality repair. Since a car involved in an accident is generally considered less safe by potential buyers, its value is automatically lower compared to other cars. 

Repair-Related Diminished Value

Not all repair jobs manage to restore a car to its former condition. Repair-related diminished value refers to the loss of a car’s value based on low-quality repairs after a collision. If, for example, the repair shop used secondhand car parts or was unable to match the color adequately, a vehicle’s value could be significantly diminished.  

Immediate Diminished Value

Immediate diminished value refers to the difference in a car’s worth before and immediately after the accident without taking any future repairs into account. These types of diminished value claims are relatively uncommon.  

The Consequences of Owning a Diminished Value Vehicle 

Drivers can be shocked to find out just how much the value of their car dropped after being damaged in an accident. You might not even realize that your car’s worth has plummeted until you try to sell it years later. 

Unfortunately, a car that has sustained major damage in a crash will always be less attractive to potential buyers, even if it was fixed to the highest standards and with no expense spared. Moreover, if you are looking to trade-in your car, dealers will typically offer a much lower trade-in price than for the same vehicle without an accident history. They know that an accident car will be a tough sell. 

Should You Disclose That Your Car Was in an Accident?

When it comes to selling your car, you may be tempted to keep quiet about a previous accident. While individuals are generally not required to mention minor damage, they may have to disclose any major accident involvement to a dealer or potential private buyer, depending on their state’s laws. In most states, dealers are required to disclose to potential buyers that a car was involved in a significant accident.

Moreover, dishonesty can backfire as potential buyers can quickly check online whether a car was repaired after getting damaged in an accident. Companies such as Carfax, AutoCheck, and others, offer car history reports. The information available in such a report can include:

  • Serious accident
  • Structural damage
  • Total loss
  • Flood damage
  • Multiple owners
  • Airbag deployment

Calculating the Diminished Value of Your Vehicle

Calculating diminished value can be complicated. Insurance companies typically use the “17c Diminished Value Formula” to assess the value of a vehicle involved in an accident. The steps to arrive at a diminished value figure with this formula include:

1. Determining Car Value 

You can determine the value of your car by using the Kelley Blue Book (KBB) or the National Automobile Dealers Association’s (NADA) websites, using the available value calculators. You will need to know your car’s:

  • Year
  • Model
  • Make
  • Mileage
  • Extent of accident damage 

2. Applying Base Loss of Value

Insurance companies will typically apply a ten percent “base loss of value” to the amount estimated by NADA. The ten percent cap is generally the maximum amount payable by the insurance for a diminished value claim. 

3. Applying the Damage Multiplier

The cap described in step 2 will be adjusted by multiplication with a damage multiplier ranging from zero to one, depending on the structural damage sustained by your car in the accident. 

1.00 - Severe damage

0.75 - Major damage

0.50 - Moderate damage

0.25 - Minor damage

0.00 - No structural damage 

4. Applying the Mileage Multiplier

The mileage multiplier will reduce the base loss of value depending on the mileage of your vehicle. The adjusted value determined in step 3 will be multiplied by the following mileage multipliers to arrive at the final diminished value of your car: 

1.00 - 0-19,999 miles

0.80 - 20,000-39,999 miles

0.60 - 40,000-59,999 miles

0.40 - 60,000-79,999 miles

0.20 - 80,000-99,999 miles

- 100,000 miles plus

Example Calculation of Diminished Car Value

Supposing your vehicle’s market value is $30,000 with moderate structural damage and 22,000 miles on the clock, you could calculate the diminished value with the 17c Diminished Value Formula in the following way:

1. $30,000 x 0.10 = $3,000 

Multiply the car’s value by the ten percent cap to arrive at the maximum amount recoverable from a car insurance company.

2. $3,000 x 0.50 = $1,500 

Adjust the value based on moderate structural damage to the car (multiply by 0.50).

3. $1,500 x .80 = $1,200 

Adjust the value based on 22,000 miles on the car’s clock (multiply by 0.80).

In this example calculation, the final diminished value would be $1,200. However, it is important to consider that there can be other ways of calculating a diminished car value figure. A car accident attorney may apply other ways of calculating damages to fight for the best possible outcome of your case, depending on your specific diminished value case.

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FAQ

Morgan & Morgan

  • Can I File a Diminished Value Claim?

    You could file a diminished value claim if:

    • Another party is responsible for causing your accident and car damage 
    • You finance or own your car 

    If the at-fault driver or liable party is insured, their car insurance company is generally responsible for your damages. This can include compensating you for the diminished value of your vehicle. If the other driver is uninsured or underinsured, you could be covered by your own insurance company, provided you have uninsured motorist coverage. 

    However, considerable evidence may be required to prove your claim, including: 

    • Photographs of the accident scene and car damage
    • Documentation of car repairs
    • A professional car appraisal 

    Our accident attorneys work with professionals that can help to prove diminished value, such as certified vehicle appraisers. Our experts know the vehicle markets and can analyze your damage as well as the quality of finished repairs. We can advise you how much value your car has lost after an accident and how to file a diminished value claim.

  • How Long Do I Have to File a Diminished Value Claim? 

    If you think that you may have a diminished value claim, you should seek legal advice as soon as possible after an accident. The longer you wait, the tougher it could be to collect the evidence and supporting documents required to prove your claim. Consider also that with the passing of time, your vehicle’s value could decrease further.  

    Most states have time limits when it comes to filing claims for property damage. Filing a diminished value claim too late could bar you from recovering compensation. Since the legal issues surrounding diminished value can be complex, speaking with an experienced car accident lawyer can help determine whether you have legal recourse and when you can file a claim. 

  • Is It Worth Filing a Diminished Value Claim?

    Diminished value claims can be challenging. If your car is older and did not sustain severe damage in a collision, going through a diminished value claim may not be worth it. However, if your car was extensively damaged in a crash and is now worth significantly less even after good quality repair, a diminished value claim could offer you compensation for significant financial losses.

    The best way to determine whether it is worth filing a diminished value claim after an accident is to consult with an accident attorney who can inform you of all potential options for recovering what you deserve after a car accident. 

  • Do Insurance Companies Have to Pay Diminished Value Claims?

    Getting reimbursed for the diminished value of your vehicle is not guaranteed. However, if the other driver is liable for your accident and has adequate car insurance, you are generally entitled to recover damages for diminished value. Remember that you will be responsible for proving your vehicle’s diminished value, and insurance companies can put up a fight. 

  • How Can an Attorney Help Me with a Diminished Value Claim?

    The laws covering diminished value claims differ from one state to another. However, our car accident attorneys know your rights and options and can advise you comprehensively. In the first instance, an attorney can determine how the accident damage affected your car's value and whether it is worth pursuing a diminished value case. 

    Dealing with Insurance Companies

    Getting what you deserve in a diminished value case can depend on the willingness of an insurance company to cooperate and compensate you. Some car insurers employ certain tactics to try and get out of paying an adequate amount for diminished value. However, an attorney can effectively negotiate with the at-fault party’s insurance company and work on securing a fair settlement.

    Investigate Your Case Fully

    You may not only be entitled to diminished value but could potentially recover other damages with a car accident. An attorney can investigate your accident comprehensively and help you understand which types of damages could be available to you. An attorney can:

    • Identify all liable parties in your accident 
    • Gather evidence to prove your claim
    • Build a case against the at-fault party
    • Provide expert witnesses 
    • Calculate the diminished value of your vehicle

    Provide Peace of Mind

    Handling a diminished value claim on your own can be time-consuming and frustrating. In our experience, car accident victims have a lot on their plate, especially if they got hurt in a serious accident. One of our dedicated car accident lawyers can handle all the paperwork and technical aspects of your claim, leaving you free to concentrate on getting on with your life. 

  • Morgan & Morgan Can Help

    If someone else caused your accident, you should not have to deal with all the hassle and expenses. Trying to sell an accident vehicle can be a headache and potentially leave you out of pocket. However, Morgan & Morgan could help you file a diminished value claim to recover your due. 

    Our car accident lawyers are committed to helping individuals recover what they deserve. We have been fighting for victims of car accidents for over 30 years and could help you too. Contact us today for a free case review.

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