Say you’ve been in a car accident. It was the other driver’s fault. You jumped through the correct hoops–called the police to take an accident report, exchanged auto insurance information, took pictures of the damage, contacted your insurance company, got the required number of estimates from repair shops, and picked up a rental car so you’d have wheels in the meantime. Car will be as good as new, right?
Yes and no. Mechanics and body shops may be wizards at restoring your vehicle to pre-accident condition, but no matter how pristine the repair job, your car’s value will take a hit after an accident. The only exception is if the car is older and has high mileage. In that case, repairs made with new parts may actually increase its resale value.
But cars that have been wrecked carry a stigma, and buyers will not pay as much for your previously wrecked car as they will for a similar make and model with a clean vehicle history report. That’s what diminished value means.
How Much Does an Accident Hurt the Resale Value of a Car?
Carfax, one of the largest U.S. companies offering vehicle data to individuals and dealers, estimates that the average loss of value is $500. If a vehicle sustained severe damage, that increases to $2,100. However, these are figures for “garden variety” cars. What if you drive a Porsche? A Lexus? A Lamborghini? In that case, you’ll probably take a huge hit when it comes time to sell your car.
Can I Do Anything to Recover Diminished Value?
If you’ve been in an accident, it pays to educate yourself about diminished value. There are conditions to be met, but if you meet them, it may be well worth your while to file a diminished value claim. After all, it shouldn’t be just “too bad for you” if your car loses thousands of dollars in value because of an accident.
If the other driver is at fault, you stand a chance of making a successful claim. If the other driver was uninsured, you are less likely to win. If you were at fault, you will rarely, if ever, have a case.
A diminished value claim is a third-party claim, meaning that with few exceptions, it is filed with the other driver’s insurance company. The exceptions include:
- Being involved in a hit-and-run, in which case you can try filing a diminished value claim with your own insurer.
- If you carry uninsured motorist property damage insurance, you can file a claim with your carrier.
Is There a Statute of Limitations on Filing a Claim for Diminished Value?
Too many people often don’t realize that their car’s resale value has been affected until they try to sell it or trade it in. By then, it’s usually too late to recover diminished value.
Every state’s laws regarding diminished value are different. Some states require payouts on such claims; others do not. Statutes of limitations vary widely. Louisiana’s is one year; Rhode Island’s is ten. Every other state falls somewhere in between, with most being two or three years.
Regardless of the statute of limitations, you should never wait to file a diminished value claim. You cannot claim diminished value after the fact if your initial settlement contained an exclusion clause, so even if you fall within the statute of limitations, you’ll be out of luck.
How Do I Make a Diminished Value Claim?
Contact the other driver’s insurance company and speak to a claims specialist to find out their rules for filing a diminished value claim. You will need to provide as much documentation as you can; the burden of proof is on you. Make sure you have:
- Accident reports
- Witness statements
- Damage photos
- Vehicle appraisal
The vehicle appraisal is important. Insurers use calculators that do not take into account such things as special attributes of your car, features you may have had installed, how perfect the paint job is, or how faithfully you followed the maintenance schedule. Therefore, a professional appraisal is highly recommended. Some appraisers will provide mediation services or, if the case winds up in court, expert witness testimony to prove your car’s worth.
If you want to recover the full pre-accident value of your car, your best chance stands in getting an accurate appraisal from someone who really knows the auto industry.