One common assumption that drivers have after a collision is that…
Once my vehicle gets repaired, I'll be back in the same position that I was in before.
Far from it.
Even after a vehicle receives a brand new paint job and all of the damages are repaired, vehicle owners experience something called diminished value. Diminished value is when a vehicle's value depreciates because it was in an accident.
Here are three facts about diminished value claims…
- Most drivers don't realize this loss in value happens
- Insurance companies don't educate their policyholders about it
- Diminished value can be worth thousands of dollars
…and choose to not file a claim.
Let's dive into diminished value…
What you'll learn:
- What Is a Diminished Value Claim?
- Why Diminished Value Matters After a Personal Injury Car Crash
- The 3x Types of Diminished Value
- How To File a Diminished Value Claim
- Common Challenges You'll Face
What Is a Diminished Value Claim?
Diminished value claims are filed to receive compensation for the loss in value that occurs after your vehicle is involved in an accident.
Here's how diminished value works…
Lets say you totaled your vehicle in an accident. You get another vehicle of the exact same make, model, year, color and everything is completely repaired.
Would you pay full price for that vehicle?
Of course not.
Your vehicle now has accident history which will show up on Carfax/AutoCheck reports. Anyone who purchases your vehicle will pay significantly less for your vehicle because of that accident history.
KBB states that vehicle values can depreciate up to 30% after an accident.
The issue is most insurance policies don't cover this loss in value.
When you file a claim for vehicle damage or injury caused in a collision, you're entitled to seek compensation for anything else the crash caused you to lose. This includes your vehicle's diminished value.
After a serious personal injury wreck, some vehicle owners decide to sell their vehicle for parts. A severe accident can greatly diminish the value of your car and leave you with no choice. That's why hiring a car accident attorney from the beginning can help you recover all of the compensation you deserve.
Why Diminished Value Matters After a Collision
Americans make millions of vehicle collisions every year. Many of these collisions result in repaired damages that you can't see with the naked eye.
But the value of your vehicle takes a huge hit.
Diminished value claims are up 10% from previous years as more and more drivers learn about recovering compensation for their totaled vehicle.
Did you know that every vehicle owner plans to replace their car at some point?
Whether trade-in or private sale, every car comes to an end. A diminished value loss directly affects how much you'll be able to sell your vehicle for.
Imagine you bought a brand new sedan for $25,000. After taking it in a collision, the vehicle's value drops to $18,000 after repairs.
You're going to be short $7,000 when it comes time to sell that vehicle.
Who's going to absorb that cost?
You shouldn't be expected to pay money you're not owed just because you were in an accident.
The 3x Types of Diminished Value
Not all diminished value is created equally. There are three types that you should be familiar with when attempting to recover maximum compensation.
Inherent Diminished Value
Inherent diminished value is sort of a "default" loss in value. Anytime a vehicle is in an accident, it's natural market value goes down.
Whether the vehicle receives $100 worth of damage or $30,000 worth of damage, the owner of that vehicle is likely selling at a lower price once it's fixed.
This is the most common type of diminished value you'll hear about.
Repair-Related Diminished Value
Repair-related diminished value occurs when there's identifiable damage to the vehicle after repairs have been made.
Maybe your vehicle doesn't open or close all the way after repairs from a side-impact collision or there's a visible paint touch up.
Repair-related diminished value adds onto inherent diminished value to really drive the value of your vehicle down.
Immediate Diminished Value
Immediate diminished value is a little different than the other two types.
It refers to the loss in value between when a vehicle is damaged and when repairs occur.
This type of diminished value is rarely used.
How To File a Diminished Value Claim
Filing a diminished value claim can be a pain but understanding the steps involved will make things clear. Here's what you need to do…
Gather your proof of damaged. This includes photos of the damage, cost of repairs, vehicle history reports, etc.
Next you'll need to get your vehicle professionally appraised. An appraisal will identify the amount of diminished value your vehicle has suffered.
Finally you can file a third-party claim with the at-fault driver's insurance company.
Third-party means
File the claim against the other driver and not your own insurance provider.
Keep in mind that each state has different rules regarding these types of claims. Speak with your attorney to learn more about your location's specific laws.
Common Challenges You'll Face
Filing a diminished value claim isn't easy. Insurance companies want to save money on these types of claims whenever possible.
Below are some of the most common challenges clients face when filing DV claims:
- Disputes of the appraisal amount
- Insurance companies not allowing the claim to begin with
- Not knowing they can file a diminished value claim
- States that limit first-party diminished value claims
The best piece of advice? Have your ducks in a row.
Organized documentation and an attorney will streamline this process and help you overcome any challenges that are thrown your way.
Tying It All Together
Filing a diminished value claim after your vehicle has been in a collision is a great way to recover money that you lost.
Here's a quick recap of what was covered:
- Diminished value is the loss of resale value after a vehicle is in an accident
- Vehicles can lose up to 30% of their value because of diminished value
- There are three types of diminished value
- You can file a diminished value claim by gathering proof of value and getting your vehicle appraised
- Many insurance companies will fight back when you file this claim
If someone was at fault for the accident that caused your vehicle to lose value, you should pursue a diminished value claim.
