Maximizing Your Auto Claim: How to Prove Diminished Value After an Accident
If your vehicle has sustained damage in an accident, you should familiarize yourself with the term “diminished value.” Diminished value is the difference in the resale value of your vehicle pre-accident versus post-accident.
Even if a cracker-jack repair team restores your car or truck to pristine condition, its vehicle history report will still have to state that it was in an accident. Buyers don’t want to pay top dollar for a car that has been damaged in the past, regardless of how well repairs were done. People will harbor a negative bias, and a vehicle is only worth what someone is willing to pay for it.
To recover diminished value, however, can take a little effort on your part, and the burden of proof is on you. However, if your car is new and low-mileage and the value drops significantly as a result of the accident, it’s definitely worth the fight to try and recover diminished value.
Should You Always File a Claim for Diminished Value?
No, if the vehicle is an older model, high mileage (usually 100,000 miles is considered high) or not overly valuable to begin with, trying to recover diminished value is probably not going to be worth your while. In fact, in the case of older cars, a repair using new parts may actually increase your car’s value post-accident.
Most U.S. auto insurance carriers use the 17c diminished value formula to estimate a vehicle’s value. You can get a rough idea of what a claim might be worth by looking your vehicle’s make, model, and year up on the website of the National Automobile Dealers Association NADA or the Kelley Blue Book. Find the vehicle’s value, add a 10% cap to that–the maximum an insurance company will likely pay–then consult additional charts to compensate for damage and mileage. (It’s not as complicated as it sounds.)
Be aware, however, that the value calculator only gives a general idea of your vehicle’s worth. It won’t take into account extras you’ve added to it or how diligent you’ve been about maintenance and babying the paint job. If you are going to prove your case and recover the maximum diminished value, you should definitely have your car appraised by an independent vehicle appraiser.
Filing a Claim for Diminished Value
Before you file a claim, you should familiarize yourself with your state’s laws governing diminished value recovery. Some states allow it; others don’t. The statute of limitations on filing a claim also varies from state to state, though most allow two years before time runs out to file a claim. In some states, insurers don’t have to pay on a diminished value claim if a vehicle is restored to pre-accident condition.
Also, you cannot file a claim for diminished value if the accident was your fault. Diminished value only applies if another driver is responsible for the accident.
If the at-fault driver is uninsured, you may be out of luck. However, if you carry uninsured motorist coverage on your auto insurance, your chance for diminished value is roughly 50-50. About half of all states allow for it under the policy; the other half don’t.
You cannot file a claim for diminished value with your own insurance company; you must file with the at-fault driver’s company, and they will not be eager to pay. Carriers are notoriously bad about dragging their feet on diminished value claims. Often, vehicle owners must resort to mediation or small claims courts to recover.
Proving Diminished Value
When you send your demand letter to the other driver’s insurance company, be unapologetic. It is, after all, a demand for payment. Cite a specific amount you expect to recover and include as much information and documentation as you possibly can. You do not need a lawyer to write this letter. There are samples online you can follow. The important thing is to flood them with irrefutable proof.
Include photographs of the accident scene and photographs of the damage to the vehicle. Any documentation of the accident, especially the police report, should accompany a claim. Finally, an appraisal from a certified auto appraiser will back up the amount for which you are asking. Some auto appraisers serve as mediators or expert witnesses in court, should the need arise.
Recovering Diminished Value Can Put Thousands in Your Pocket
If you have a high value vehicle, it’s definitely worth the effort to recover diminished value. Your claim could be worth thousands of dollars, and it’s money left on the table if you don’t file a claim. Obtaining a diminished value appraisal is essential in recovering the most you can for your vehicle.