9 April 2020
 Categories: , Blog

If your car was involved in an accident, its post-accident value will likely be less than its initial value. The difference between the two values is the diminished value of the car. Below is an overview of a diminished value claim.

1. Reasons for Diminished Value

Cars damaged by accidents lose their values due to different reasons. Below are some of the various forms of diminished values.

Accident Damages: You likely already understand that an accident can cause some damages to a car, and a damaged car is less valuable than a car without damages. This immediate loss of value exists even with cosmetic damages. For example, if someone scratches your car in a sideswipe accident, the car won't be as valuable as it was before the accident.

Deficient Repairs: A car can also diminish in value if the repairs are not perfect. Maybe the mechanic used low-quality replacement parts, or the new paint isn't a perfect match to the old paint.

Perception: You would expect the immediate diminished value to disappear if you get the repair perfect, but this is rarely the case. In most cases, a damaged car loses some of its value even after perfect repairs. If you want to sell the car, potential buyers will likely lower their offers if they learn about the accident history of the car.

2. Getting Diminished Value Compensation

Although the diminished values of damaged cars are clear and obvious, the compensation process is not always that straightforward. Below are some factors that determine whether you can get compensation.

State Laws: If you want to pursue a first-party accident claim, then state laws determine whether you even have the right to the compensation. According to the Insurance Information Institute (III), some states don't allow diminished value damages in third-party claims.

Type of Claim: The type of claim determines how likely you are to get your diminished value damages. Depending on your state laws, you might not have a problem claiming for diminished value from a third party. However, getting the damages in a first-party claim is usually much more difficult.

Policy: With a first-party claim, your auto insurance policy also comes into play. Some insurance policies clearly exclude the damage, while others include it—sometimes as an add-on. Thus, the type of policy you have also matters.

Hopefully, you will collect your damages from the insurance company without any complications. Unfortunately, complications sometimes arise—consult a car accident lawyer if you run into complications or if you have a particularly large claim.