Filing a diminished value (dv) claim after an accident is necessary if you want to recover the difference between what your car was worth before the crash and what it is worth now. For while the insurance company covers the cost of restoring your car to its pre-accident condition, it does not cover diminished value.
No matter how great the repair work, a car with an accident in its history is almost always worth considerably less than it was beforehand. That means that if you sell your car, it will not bring as much as another car of the same make and model with a clean vehicle history report. If it’s a luxury car, the difference will probably be in the thousands.
Criteria for Filing Diminished Value
Not every accident is eligible for a diminished value claim, and recovering diminished value is never a given. Frankly, unless a car is a luxury vehicle or a classic, sought after make and model, most older vehicles–generally more than ten years old–with high mileage are not worth going to the trouble of filing a claim. You’re unlikely to recover much of anything for your trouble. Newer cars, however, especially high end luxury vehicles like BMWs and Porsches, are well worth filing a dv claim.
When the accident is the other driver’s fault and that driver is insured, you can file a claim against his or her insurance company. Diminished value claims are considered third-party claims because they are made by someone who is not a policy holder with that insurance company.
If the accident was your fault, you cannot file a diminished value claim with the other driver’s insurer, and your own insurance company will almost never make good on such a claim. In some states you can’t even file a diminished value claim if you’re the at-fault party.
The only time you can file a diminished value claim with your own insurance carrier and hope to have any success is if you have uninsured motorist property damage coverage. About half the states in the U.S. allow you ro recover diminished value if you have such coverage.
Incidentally, an average of 1 in 8 motorists are uninsured, according to the Insurance Research Council, so there’s a decent chance that if you’re in a wreck, the other driver will be uninsured. Depending on where you live, that percentage can take a huge jump. In Mississippi, for example, 29.4% of drivers–or about 1 in 3–are uninsured.
How to File a Diminished Value Claim
Your insurance company is not responsible for filing a dv claim; it is up to you. All the “legwork” and the burden of proof will be on you as well.
The first step is to contact the other driver’s insurance company and speak with a claims specialist to find out the procedure for filing a claim. You will likely need to write a demand letter detailing the amount you expect to recover. This is something you can do without a lawyer; there are templates online.
The more proof you have to back up your claim, the better. Provide accident reports, eyewitness accounts, and photographs of the damaged vehicle.
How to Determine a Diminished Value Amount
The diminished value amount should be based on an accurate appraisal of your vehicle. The insurance company will calculate the loss using the 17c formula that begins with an arbitrary figure of 10% loss that favors them and limits payouts. It doesn’t make adjustments for factors such as severity of the damage. In addition, their calculation doesn’t take into account anything that might be specific to your car, like special features, customization, or the great care you’ve taken to follow the recommended maintenance schedule.
To recover the actual diminished value of your car, you must know what that amount is and be able to prove it to the insurance company. To get an idea of the market value of your, you can use an online calculator found at NADA or Kelley Blue Book. You could also get a free appraisal from a dealer. For an airtight appraisal of your vehicle’s pre- and post- accident worth, however, you really must get it done by an expert auto appraiser.
What if I Don’t Like The Insurance Company’s Offer?
You do not have to accept the insurance company’s official settlement amount; you can enter into mediation to try and reach an agreement. If you are still unable to receive satisfaction, you may have to take your case to court. In either case, there are highly respected, professional auto appraisers who offer mediation and expert witness services.
If you’ve been in an accident and it wasn’t your fault, you should not be expected to “eat” the loss of value that accompanies a wrecked vehicle. It may take some work on your part, but recovering thousands of dollars in diminished value is well worth the trouble.