A car damaged in an accident, even after repair, is generally worth less than a comparable model that was never involved in a crash. The difference in worth is known as “diminished value”. Selling an accident vehicle can be challenging as potential buyers can easily check a vehicle’s accident history. Therefore, if you experienced an accident due to another party’s fault, you could qualify for a diminished value auto claim.
If you got hurt in an accident that damaged your car, you could also receive damages in addition to diminished value, such as loss of income, medical bills, and others. However, getting your due from an insurer can be a challenge. Morgan & Morgan’s determined car attorneys can handle the insurance company on your behalf and fight for the settlement you deserve. Contact us now for free legal advice.
Types of Diminished Value Claims
Even if your accident vehicle was repaired to the highest standards, its resale value would be lower, according to the Insurance Information Institute (III). Moreover, anyone looking to buy a used car can find out about a vehicle’s accident history online. If you are hoping to sell an accident vehicle, therefore, you could lose out financially unless you file a diminished value claim after an accident. There are three types of diminished value:
1. Inherent Diminished Value
Inherent diminished value refers to a vehicle’s loss of value simply due to accident damage. Inherent diminished value occurs despite a vehicle’s repairs being of high quality without any visible flaws. Inherent diminished value is the most frequent type of diminished value claim.
2. Repair-Related Diminished Value
Sometimes, repair work fails to restore a car to its pre-accident condition. Inferior parts, bad color matching, or substandard workmanship can all diminish your car’s value, particularly if you own a luxury car. When repairing a high-end vehicle such as a Mercedes or Porsche, original manufacturer parts should be used. Using refurbished or generic car parts can diminish the value of a luxury car considerably. Antique cars can run into the same problem. Moreover, it could be impossible to find original parts when a classic car is wrecked in an accident.
3. Immediate Diminished Value
Your car loses value instantly when involved in an accident. Immediate diminished value refers to the worth of your vehicle after an accident and before any repairs have taken place. Since most have their car repaired as soon as practical after an accident, immediate diminished value claims are uncommon.
How to File a Diminished Value Auto Claim
Once you have decided to file a diminished value claim, acting promptly can be advantageous. Gathering evidence that can help prove your accident claim is typically easier when done as soon as possible after the crash. If you wait too long, vital documents and evidence could disappear. Your car’s value could also drop further while you are waiting to file a claim. Your next best steps after an accident can include:
Determining Who Is at Fault for the Accident
Insurance companies typically determine fault in an accident by examining the facts and circumstances. The more evidence you have gathered regarding another driver’s fault, the better for your case. Evidence can include:
- Photographs of the accident scene
- Witness statements
- Police reports
Communicating With the Insurance Company
You would typically file a diminished value claim with the at-fault party’s insurance company. Therefore, a good step can be contacting the insurance company to find out how to handle a diminished value claim. Ask the insurance company which information you should provide for the processing of your claim. It is important to note that if the at-fault driver in the accident was uninsured, you could file a diminished value claim with your own car insurance, provided you have uninsured motorist coverage.
Calculating Diminished Value
Your car’s pre-accident value is determined based on its model, age, and mileage. Further information on how to assess your car’s value is available at the Kelley Blue Book (KBB) or the National Automobile Dealers Association’s (NADA) website.
Most insurance companies use the 17c formula for calculating the diminished value, depending on the extent of your car’s accident damage and mileage. First, they will apply the ten percent cap to the value of your vehicle as estimated by NADA. Then, your car’s value is assessed using damage and mileage multipliers depending on the severity of damage and the number of miles on your car’s clock.
However, the 17c formula has flaws that could lead to too-low diminished value appraisals. If the insurance presents you with a calculated diminished value figure that seems inaccurate, consider a third-party damage assessment from a licensed appraiser. The third-party report can help negotiations with an insurance company.
Filing the Diminished Value Claim
Ensure you follow the insurance company’s instructions for filing the diminished value claim and answer any questions and queries. If there is no response to your claim after a few weeks, contact the insurance company for updates. If the insurer is unresponsive or minimizes your claim, consider contacting an attorney for help as soon as possible.
Do You Have a Diminished Value Claim?
You could have grounds for filing a diminished value claim if your car was significantly damaged in an accident, and:
- You own or finance your car
- Another party is liable for your accident
The at-fault driver’s insurance company is generally responsible for reimbursing you for any damages sustained in an accident, which can include the diminished value of your vehicle. Having your car appraised by a professional can help with getting your due after an accident. Morgan & Morgan has access to investigators and experts that can assess your car’s damages. Our experienced car accident attorneys can walk you through the legal issues and help you file a diminished value claim.