Yet, the best repair cannot remove another sign of a crash—the diminished value of the car. This difference between the initial price of the car before the collision and its final price even after the repair process is over is what diminished value means for insurance companies. Knowing how carriers calculate the diminished value of your car will help you see the red flags in their offer.
What Shapes a Vehicle’s Diminished Value
There are several criteria that affect the amount of diminished value of the car, among which are the seriousness of the damages, the involvement of the frame or structural parts in the damages, the age and the mileage of the car, and the attitude toward cars with an accident history in the local market. The newer and lower mileage the car is, the more its price decreases.
The Formula Behind Most Insurer Offers
The 17c approach, alternatively referred to as the pre-loss formula approach, has remained the preferred method for some insurance companies for many decades now. The model depends on a pre-loss value, damage multiplier, and mileage factor. Although the formula appears to be objective, its problem lies in the fact that all the factors involved have a maximum percentage limit, which prevents the calculation of very high amounts regardless of the actual loss in the market. It is the fixed limit that makes most calculations based on such a formula fall below the independent appraisals.
Common Tactics That Undervalue Diminished Value Claims
In addition to the formula, claims adjusters have several ways of ensuring low payments: using a generic appraisal tool, applying the discount in case an approved repair facility repaired the car using original parts, or excluding it as an element of damage unless brought into the calculation by the car owner. Most adjusters even claim that previous cosmetic damage negates any other loss from the accident. Car owners who do not go for an independent appraisal usually accept any payment figure given to them without knowing its intention.
Protecting the Value of Your Claim
An effective claim begins with the documentation: photographs taken prior to the accident, maintenance receipts, and a repair invoice listing everything that had been replaced. A licensed, independent appraiser is able to provide an estimate based on current market prices, which would hold more water than the insurance company’s equation. Given that the laws and requirements vary by state and by policy, many individuals have their claims reviewed by an attorney.
Frequently Asked Questions
What is a diminished value claim?
It is a demand for the gap between the value of the car before the accident and its value after the restoration based on the theory that the presence of the accident in the records of the vehicle reduces its resale value regardless of how good the repair was.
Does every accident qualify?
Not always. If there is minor damage that was fixed properly, then no loss would be incurred, but if the damage is moderate or worse, including the frame, then it would probably constitute a loss.
Can I file against my insurer?
It will depend on the laws of the state you reside in and your insurance policy. Some states permit a first-party claim, whereas others only a third-party one against an at-fault driver’s policy.
How is this different from a total loss payout?
A total loss claim would cover a car that the insurance company believes isn’t worth fixing. This coverage includes cars that have already been repaired and returned to use but have experienced some depreciation in their value.
Do I need an appraisal?
Filing isn’t always necessary, but an independent evaluation makes a case much stronger through having an actual number argue against the insurer’s own valuation.
Is there a deadline to file?
Yes. Many states have statutes of limitations on property damage claims, and they may be shorter than expected, so it’s important to act fast after repairs are made.
If your car has been repaired and you believe that the insurance company is undervaluing it, our team at Car Value Law can help look at your case and determine what fair compensation would entail.
