Getting into a car accident is always stressful, but when the repairs are done and it’s time to sell or trade in your vehicle, you can be left with a loss of value. This is due to the fact that potential buyers will look at your car’s accident history and see what was involved in the accident. They will then discount your vehicle’s resale value because of this history, even if the repairs were done well. This is called diminished value and can be recovered in some states.
You must be able to prove diminished value in order to get compensated for it. It is also important to note that you cannot file a diminished value claim with your own insurance provider; it must be filed through the at fault driver’s insurance company (assuming they have liability coverage).
Diminished value claims are generally covered under property damage liability. In most cases, the insurance company will try to deny your claim or coerce you into agreeing to a small sum as compensation. This is why it’s so important to have uninsured motorist coverage that can step in and take on the at-fault driver’s insurance company in these types of situations.
The most common way to establish diminished value is by obtaining an appraisal from a third-party source that specializes in this type of claim. Many people turn to their car dealers or licensed auto appraisers for this documentation, but they may not provide the best evidence. A professional, third-party diminished value appraisal will examine every aspect of the car to give you an unbiased estimate. This will be the most effective form of documentation to use when negotiating with the insurance company.
Once the diminished value is established, it’s then up to you to convince the insurance company that they are obligated to pay this amount. This can be a difficult task since most insurance companies are looking to avoid paying out on these claims. It’s best to have a lawyer on your side who can help you with this. Your attorney can help you gather market research data, repair estimates, and independent diminished value appraisals to strengthen your claim and increase the odds of getting paid.
Insurance companies have different rules, regulations, and laws when it comes to diminished value claims. You will need to find out the specifics of your state’s law to determine if you can make a claim and what the process is like.
Generally, most insurers follow what is known as the 17c formula. This calculation starts with the sales, or market, value of your vehicle estimated by sources such as NADA and Kelley Blue Book. They then apply a percentage cap, which is commonly 10%, to this sales value to establish the base loss of value.
They then multiply this base loss of value by a “damage multiplier,” which can vary from 0.00 to 1.00 based on the extent of the damage and whether or not the vehicle was totaled in the accident.