The average car depreciates nearly 50 percent of its new car value within the first three years and then slows to 10 to 15 percent per year after that. If that car has been in an accident, then you can add an additional 10 to 25 percent to that depreciation rate, depending on the severity of the damage.
How Do You Handle Depreciation in a Car Accident Claim?
It is no surprise that after your vehicle is involved in a car accident, its value will necessarily decrease. Even if your auto body shop makes the necessary repairs to restore it to “mint condition,” the accident is forever branded on your car’s history and will diminish its selling value. You should not have to bear those unintended consequences of another person’s negligence. In fact, after an accident, the other driver is liable for restoring your car to its worth before the accident. Many insurers will attempt to argue that the repairs have restored the original value to the car, but with websites like CARFAX providing access to automobile accident reports at a low cost, it is nearly impossible for a car with accident history to sell for the same value as one without an accident. Even if you do not plan to sell your car anytime soon, it is your right to recover the lost value because from now on it will sell for less than if it was not in the accident.
In this situation, you are entitled to monetary relief in the form of a diminished value insurance claim. The basic definition is an inherent diminished value, and it is the difference between the value of your car after repairs and what the value of the car would have been if it had never been in an accident and required repairs. The second type of diminished value is called immediate diminished value, and it is the difference between the resale value of the car just prior to the accident and the resale value of the car immediately after the accident, before repairs. The third type is called repair-related diminished value, which is when your car received less than optimal repairs. Diminished value claims occur in one of two situations: if another driver was at fault for a car accident which damages your car, or if your own insurance company chooses to repair rather than total your damaged vehicle.
What Other Factors Affect the Value of My Car?
Factors that negatively influence a diminished value claim (although there are always exceptions) is if the car is older than 7 years old, has a higher mileage (especially over 100,000 miles, is a less expensive make and model, has any prior accident history, the extent to which you are at fault for the current accident, and if the standard of living is lower in your area. Insurers will use these factors to discourage you from moving forward with your claim. They know it will be difficult for you to find a lawyer because the lawyer will not be able to make a large sum of money from this kind of diminished value case. Thus, they will drag their feet or try to deny the legitimacy of your claim because they believe they can intimidate you into dropping the case. If you are not able to negotiate your diminished value claim with the insurance company, the next step is to send a demand letter; if the insurer still refuses to negotiate with you, then you may file suit against the party at fault. From that point, the insurer will either be forced to settle or pay to legally defend their insured. One other note: if the at-fault driver does not have insurance coverage at all, you could still receive relief from your own insurance company if you elected to have uninsured motorist or collision coverage.
Before you proceed with this type of claim, know that it is your responsibility to prove that the repaired vehicle is worth less than its value before the accident. To do this, you will need an appraisal of the car’s value before the accident and after the repairs are completed. There are websites available to help you calculate a ballpark range of how much your car is now worth. It is advisable to complete this activity first so that you do not end up accepting a lower amount from the insurance company than you deserve. All in all, know that a diminished value claim is a legitimate course to pursue and that the at-fault insurance company will do everything possible to discourage you.