How Should I Handle a Diminished Value Claim in Delaware?
Car accidents are always a source of aggravation and distress, particularly when you were not at fault. Beyond the frustration of a damaged car, you may even be looking at injuries to your person. Now, you have to go through the complicated process of dealing with the insurance companies while you’re trying to recover. It’s more than just inconvenient; it can be life-changing.
However, one thing you may not realize is that even if the insurance company repairs your car and you receive it back in near mint condition, your car now has an accident history that is linked to your vehicle’s identification number. When you go to resell your vehicle in the future, buyers may not look at the vehicle in the same way they would another vehicle with no accident history. Oftentimes, the value of the car is diminished in the eyes of a consumer. In the state of Delaware, diminished value claims are a valid way to recoup the loss of the value of your car from an accident that was not your fault.
You’ve heard the industry saying, once you drive a new car off the lot, it immediately loses value. Well, that holds true for new, low-mileage cars that are in an accident. A car accident can cause you to lose 10 to 25% of the car’s value right off the bat, and this is even more true for pricey luxury cars.
What is a diminished value claim?
Many people are not aware they can be compensated for the diminished value of their vehicle after an accident. It’s no surprise that the insurance companies keep this quiet. In fact, you should never rely on the other party’s insurance company to apprise you of all your rights. In Delaware, diminished value means you are entitled to the post-repair difference on the value of your car, or depreciation if the other driver was at fault.
The second-hand car market is on fire right now due to the pandemic and worldwide issues with the supply chain. In an unstable economic environment, everyone is looking for a bargain, and since automobiles are the second priciest investment consumers make, people are more eager than ever to negotiate a more favorable price for themselves. Because of this, consumers will use your car’s accident history as a reason to haggle. If you’re compensated for the difference with a diminished value claim, it will be easier for you to stomach the lower cash price for your car should you sell it.
It’s important to note that a diminished value claim is not directly related to the liability claim for repairs and medical bills after an accident. It’s a separate type of liability claim with the insurance company. If you have a pending personal injury claim for which you expect to go to court, it’s essential that you seek the advice of an attorney as Delaware does not allow plaintiffs to split their cause of action in court.
What are the types of diminished value claims?
There are three different types of diminished value to take into account:
Inherent diminished value - Inherent diminished value is the loss of your car’s value which occurs because your car’s been in an accident. Accidents are reported to entities like CARFAX and AutoCheck which are then used by consumers and dealers alike to make decisions on an auto purchase or trade-in. Because your car has an accident history, your ability to get a fair trade or the full value of your car is jeopardized. So even though the insurance company returned your car in the same condition it was in pre-accident, you’ve still lost money from your car accident.
Instantaneous diminished value - Instantaneous diminished value happens exactly at the moment of your accident. This is typically referred to as the “cost of repairs” which the at-fault party’s insurance company pays to return your car to pre-accident condition. However, the cost to return your car to pre-accident condition does not cover the car’s pre-accident value.
Repair-related diminished value - Repair-related diminished value happens when a mechanic makes substandard repairs or uses parts that are cheap, often from overseas. This kind of diminished value can particularly impact higher-end vehicles like Lexus, BMW, Mercedes, or Teslas. It’s always important to use a quality mechanic and demand the use of original parts when having post-accident repairs done on your car. If poor work and bad parts are used, your vehicle loses value right out of the gate. This sort of issue is usually something to be worked out between you and your mechanic.
When should I file a diminished value claim in Delaware?
It’s important to note that Delaware has a two-year statute of limitations for diminished value claims. A statute of limitation is the maximum amount of time that two parties in a dispute have to begin legal proceedings. After the time is up, there is no legal recourse. When you’re thinking about filing a diminished value claim, it makes sense to make sure it’s worth your time and effort. Here are a few things to consider:
What was the value of your car pre-accident? - Cars that are older with high mileage are less valuable than their newer counterparts, even those that have been in an accident. Undertaking a diminished value claim may simply not be worth the effort, that is unless you are already undertaking a personal injury claim linked to the accident. Then the attorney representing you can go after the defendant’s insurance for this additional claim.
Was the accident your fault? Delaware law dictates that if you were at fault for the accident you cannot file for diminished value compensation. Nor, if the damage was caused by something other than a collision. However, you may find some relief in the tax code. There is something called “uncompensated casualty loss” which could allow you to deduct the post-repair diminished value from your income taxes. This is something to discuss with your tax advisor.
Did the other driver have insurance? Delaware drivers are required to carry minimum limits of auto insurance. However, people have been known to break laws or lapse in their payments. If you find yourself in a collision with an uninsured driver, you can check your own policy to see if you can be compensated for diminished value by your own insurance company.
How do I file a diminished value claim in Delaware?
Since Delaware’s statute of limitations on torts is 2 years, you need to file a diminished value claim sooner rather than later. In any legal matter, evidence is crucial to bolster your claim. Since the validity of a diminished value claim rests on whether you were at fault or not, the first thing you’ll need to prove is the other driver’s liability.
In the best-case scenario, you will already have documentation in the form of a police report and witnesses concerning liability. We always advise our clients to call the police after any car accident for this precise reason. If you missed this step because it was a minor accident, you will hopefully have saved your own documentation in the form of pictures or dashcam footage that can help prove you were not at fault.
Another helpful thing is to submit appraisals from either a licensed appraiser or online portals like Kelly’s Blue Book. An independent appraiser can be pricey though and may only make sense if the car was higher end. Also, if you have recent pictures of the vehicle pre-accident, submit them with all other documentation.
Contact the at-fault driver’s insurance company to learn how they handle these types of claims. Be sure to follow all instructions and promptly reply to any questions they may have. Quick follow-up is the key to a smoother process.
When should I hire a lawyer for a diminished value claim in Delaware?
Most insurance adjusters try to do the right thing, however, it’s not unheard of to run into unethical adjusters. When that happens, it’s important to hire a lawyer to straighten things out. Here are some statements that are a signal you may need professional help to get a favorable outcome.
- We don’t reimburse for diminished value
- You haven’t sold your car, so you haven’t experienced diminished value
- We don’t recognize the concept of diminished value
- Your car has already been repaired to its pre-accident state, that’s all we are obligated to do
- If you don’t like how your car was repaired, that’s between you and your mechanic
- You haven’t actually lost any money
- Diminished value is speculative
- Your damages are just a theory
- There are no laws that dictate we have to pay diminished value
- We won’t report the damages so you won’t have a bias when you try to sell your car
- Our client’s policy doesn’t include coverage for this kind of damage
Insurance companies are always out to protect their bottom line. Sometimes you’ll run across these kinds of invalid arguments presented in an effort to dissuade you from pursuing your rights. If the at-fault party's insurance company is throwing up these kinds of roadblocks, you need a lawyer to remind them of their obligations.
Why hire Morgan & Morgan diminished value lawyers?
Our law firm has a reputation with the big insurance companies because they know we fight hard for our clients. Being in business for 30-years has taught us many things, but foremost is that sometimes you have to turn up the heat before you get the results you want. We’ve lit fires on behalf of our clients in literally hundreds of thousands of cases recovering billions for our clients. That’s right, billions! You’ve got to be doing something right to get those kinds of results.
Morgan & Morgan attorneys not only have the experience to win your claim, but they also have a tremendous support system at their disposal to help clients just like you. When you’re ready for professional help, we’ll be right there for you. Please don’t hesitate to reach out anytime for a free case evaluation. We work on a contingency fee basis, so if we don’t win, you don’t pay.