A damaged car, whether resulting from an accident or a mishap like falling a tree, is never the same as it was before. Depending on the severity of the damage, the car can be a complete wreck and lose its market value significantly. This is because potential buyers will now hesitate to purchase your vehicle. Thankfully, you can file a diminished value claim to recover your loss.
After an accident, your car’s market value significantly decreases, depending on its severity. Your vehicle never has the same market value it had before the accident, and this remains true even if the vehicle is restored to its original condition. It is because your car now has an accident history. The reduction in market value is the diminution of value or diminished value.
The diminished value claim allows you to file a claim against the at-fault party or your own insurance company and recover the estimated diminished value. Depending on the state and its laws, you can also recover the medical bills with this claim.
There are 3 important types of diminished value:
The immediate diminished value refers to the difference between your car’s market value immediately before and after its accident. For instance, if your vehicle is worth $53,000 and is involved in an accident due to which the value is reduced to $49,500, $4,500 is the immediate diminished value of your car.
This is the difference between your car’s market value before and after an accident repair. Suppose your car was worth $53,000 before the accident, $49,500 after the accident, and $51,000 after repair. $2,000 is your vehicle’s inherent diminished value.
When your car is repaired with substandard parts, it further decreases the market value of your vehicle. The reduction in the market value of your car resulting from poor repair is titled as repair-related diminished value. If your vehicle is worth $49,500 after an accident and after repair, its market value drops to $46,000, $35,000 is the repair-related diminished value.
Different states feature diminished value claim laws accordingly. For instance, diminished value claims are filed against the at-fault party’s insurance company in many states. In these states, you can not recover the losses if you were partially responsible for the accident. Similarly, some states like Georgia allow you to file a claim against your own company and recoup the diminished value of your car.
You can file a diminished value claim if your car matches the following criteria. These criteria may differ according to the state:
Insurance companies typically calculate diminished value using the 17C formula. This formula was found in a Georgia court case decision. One by one, it multiplies the car’s market value by a 10% cap, damage multiplier, and mileage multiplier. Websites like the National Automobile Dealers Association (NADA) and Kelley Blue Book (KBB) provide tools to determine a car’s market value.
Multiplication of 10% or 0.1 with the car’s value figures its base loss. Then, damage multipliers (0 = cosmetic damage only, 0.25 = minor damage, 0.50 = moderate damage, 0.75 = major damage, 1 = severe damage). Finally, mileage multiplier (under 20,000 miles = 1, 20,000-39,999 miles = 0.8, 40,000-59,999 miles = 0.6, 60,000-79,999 miles = 0.4, 80,000-99,999 miles = 0.2, over 100,000 miles = 0).
Typically, the at-fault party’s insurance company covers your diminished value claim. However, in some states, your car insurance company may also cover the claim. For instance, if the at-fault driver is uninsured, you can file a claim against your uninsured motorist property damage coverage.
Here is how to file a diminished value claim:
First, you must determine the at-fault party. You will file the claim against the at-fault party's car insurance company. In some states, it’s also allowed to file a claim against your own company.
You should hire an independent appraiser and get your car’s market value evaluated. They will provide you with a detailed appraisal report, which will help you get a fair claim settlement.
Collect all documents, including car appraisal reports, repair estimates, repair invoices, photos of damage before and after the accident, etc. These documents will help you present a strong case against the insurance company.
Contact the insurance company and send them a demand letter along with documents related to claims.
When the insurers evaluate the diminished value of your car and offer a settlement amount, negotiate for a higher price if you think their offer does not match your expectations.
Seek the help of an attorney, one with experience in car accident cases, if possible. They will handle the case and help you get a fair settlement.
You should always file the claim as soon as possible with the at-fault party’s insurance company. This way, it's easier to present your case to the insurers with all documents. Moreover, the longer you own it, the worse your car’s condition will be, leading to a decrease in its market value with each passing day.
There is more than one reason why insurance companies try to minimize or avoid payouts. Insurers are business-centric and try to save money for the company. They also suspect every case because many people file fraudulent diminished value claims. Here are a few excuses insurers can give to avoid payouts:
A diminished value claim is very complex, we know, and this is why we are here to help you at every step of the process. Whether you don’t know how to file a claim or need help with the evaluation of the car’s market value after an accident, we serve you with everything. We deliver several other services, including total loss value appraisal, heavy equipment appraisal, lease return inspections, etc. So, why wait? Call us at 866-659-5146 or email us at office@adr-claims.com.
It depends on various factors, such as the car’s mileage, extent of the damage, model, etc. If your vehicle is new, has low mileage, and was heavily damaged in an accident, you have a high chance of a successful diminished value claim. Contradictory to that, if your car is new, offers good mileage, and has minor damage, there are lower chances of a successful claim.
Yes, just about all the car insurance companies allow diminished value claims; however, most of them will not approve the claim. Your state’s insurance laws may also influence your eligibility to file a successful diminished value claim.
Diminished value claims are more complex and take longer to get approved. Some drivers even find that claim finalization takes weeks or even months. Hiring a lawyer also lengthens the process, although it helps in a fair settlement.
You must own the vehicle to file a diminished value claim. In case the vehicle is leased, you should still contact the leasing company and inform them about the accident.
Most states offer two years from the date of the accident to file a diminished value claim; however, this can vary according to laws. Also, having a long deadline doesn’t mean you should delay filing a diminished value claim.
Our quick and simple appraisal process can help you recoup vehicle-related losses.
