What You Should Know About
Diminished Value Claims
Getting into an accident can be expensive, in more ways than one. Beyond the damage to your car, you may also need to pay for medical care or take time off work. In addition, collision damage also impacts your vehicle’s value, even after it’s been repaired.
The good news is that auto insurance providers offer a variety of policies designed to cover the different types of losses you might encounter after an accident, including diminished value claims. These claims specifically address the decline in market value your car can suffer after being involved in an accident.
What Are Diminished Value Claims?
With vehicle collisions, one driver will typically be considered at fault. In California, drivers are allowed to file a claim with the at-fault driver’s insurance company to compensate for the diminished market value caused by the car accident.
Instead of covering the total value of the vehicle, diminished value claims cover a percentage of the car’s value. Typically, insurance companies limit such claims to 10% of the vehicle’s pre-accident appraised value. Therefore, the maximum payout you can expect to receive from this type of claim is 10% of your car’s value. However, insurers will adjust this percentage based on your vehicle’s mileage before the accident and how much damage it sustained. That means that even if your car has decreased in value by thousands of dollars, you may only receive a few hundred dollars.
Essentially, these claims are a means of providing additional compensation to drivers who weren’t responsible for an accident but whose vehicles sustained damage. The at-fault driver’s insurance company will usually pay for the repair or make an offer to fix the not-at-fault driver’s damaged vehicle.
If the not-at-fault driver believes the vehicle’s value will significantly depreciate after it’s repaired, they can file a diminished value claim to offset the cost of the loss.
Understanding the 3 Types of Diminished Value Claims
In general, a car loses value in two ways after an accident. First, simply having a record of an accident on the car’s history decreases its value, regardless of the extent of the damage. Secondly, the quality of the repairs and replacement parts can decrease the value.
Diminished value claims can be categorized into three types, depending on the timing and value of the collision repairs:
- Immediate diminished value claim: applies to cars that haven’t been repaired yet. This type of claim considers the loss of value from the accident and the need for repairs.
- Inherent diminished value claim: made after repairs have been completed and focuses on the decrease in value due to the accident alone. Even if a car appears to be in better condition after the repairs, this type of claim can still award compensation for its inherent diminished value.
- Repair-related diminished value claim: compensates for the decrease in value resulting from the parts and repair methods used. For example, a car that’s repaired using original equipment manufacturer (OEM) parts is more valuable than one repaired using aftermarket parts.
When Can You File a Diminished Value Claim?
Certain conditions must be met to file a diminished value claim:
- You must be deemed not at fault for the accident.
- The other driver involved in the accident must have insurance.
- Your car must have had value before the accident.
- You must reside in a state that recognizes diminished value claims.
When insurance companies assign value to a car, they take several factors into account, including:
- Special features
- Pre-accident condition
A 20-year-old car with 300,000 miles and missing parts before the accident is unlikely to qualify for a diminished value claim. In contrast, a car with only 8,000 miles in like-new condition before the accident is more likely to receive compensation through a diminished value claim.
Get a free estimate for the diminished value of your vehicle here.
Filing a Claim
To file a diminished value claim, you’ll need to submit it to the at-fault driver’s insurance company; check their policies for submitting a claim. The insurance company will ask for specific information, such as a police report determining fault, pictures of the damage, and bills or estimates for repair. You may also need to get an appraisal to determine your car’s value.
If an insurance claim has already compensated you for necessary repairs, filing a diminished value claim can be cost-prohibitive, as the expense of gathering evidence may exceed the final payout. Nevertheless, diminished value claims can provide a safety net if you stand to lose a significant amount of your car’s value, even after repairs.
After an accident, it’s important to understand all of your options for recouping your losses, including diminished value claims. At Cline Collision Center, we understand the importance of OEM repairs and how they can impact the value of your vehicle. Our experienced team has completed training on OEM repair procedures and uses OEM parts to protect your car’s value and ensure its fully restored to its pre-accident condition. If you need repairs or have questions about filing a diminished value claim, contact us today at (707) 591-9909.