When most people talk about the effects of car accidents, they focus on injuries and deaths caused by them. But if you’ve ever been involved in an accident, you know that they cause a domino effect. The effect on your life goes beyond just your injuries.
You might be forced to miss work or have to arrange additional childcare. Did you have other belongings in your car like your laptop or even your cell phone? Those could be damaged as well and will need to be replaced. Even after the initial accident, you’ll need to take time for phone calls with your insurance company, doctor’s visits, and more.
One big effect you’ll need to deal with is the damage to your vehicle. Even minor damage means that you’ll be without your car while it’s being repaired. You’ll also face plenty of paperwork, and usually some back-and-forth with the insurance company about getting your repairs covered. Once repairs are done, your car might be fully functional again. But it will never regain the value that it held prior to the accident.
Thankfully, filing a diminished car value claim can help offset this. What is a diminished value claim, and how can you get your insurance company to pay it? Keep reading to find out.
How the Value of Your Car Changes After You Drive It Off the Lot
From the moment that you drive a new car off the lot, it begins to lose value. You've likely heard this before. In fact, even a used car may begin to lose value after you’ve bought it. That's because car dealerships will usually sell for more than the true Blue Book Value of a vehicle in order to get a profit themselves.
The value of a new car likely won’t go down that much on the day you buy it. Or even in the weeks after. Instead, as a general rule of thumb, a vehicle will lose between 15 and 20 percent of its value each year. This means that when your new car enters its second year, it will be worth between 80 and 85 percent of what it was worth when you purchased it. In the third year, it will again be worth between 80 and 85 percent of what it was worth when it entered its second year.
Of course, other things can also cause your vehicle's value to drop. Besides car accidents, this might include other damage to the inside or outside of your car. Hail damage, smoking inside, or dents on the exterior of the car all lower the value of your vehicle. This is true even if they occur immediately after you’ve purchased it.
In some cases, though, you could actually add value to your vehicle after driving it off the lot. This only applies to cases where owners add additional features to the vehicle and it is rare. Even if you feel that a modification is improving the vehicle, it can still lower the value of it, as it’s not a factory-installed feature.
How the Value of Your Car Changes After a Car Accident
Now, say that you get into an accident and your vehicle is damaged. Even if you’ve taken great care of your car, it will instantly lose value.
If the vehicle is totaled, insurance will pay the replacement value of your car. This isn’t the value that you originally paid. Instead, it is an adjusted value based on things like the prior mileage and how long you owned the car. Usually, the Kelly Blue Book Value is used to determine what your car would have been worth if you sold it immediately before the accident, and you’ll receive that amount.
If the insurance company determines that your car is worth more than what it would cost for repairs, they’ll instead opt to pay for those repairs rather than pay the value.
The age of your car will affect this decision; an older car or one with high mileage has a lower replacement value. So it may save the insurance company money to pay the replacement value rather than paying for costly repairs. But with a new vehicle, it’s likely that repairs will be less expensive for the insurance company than paying the replacement value. This may even be true of more extensive repairs. The insurance provider will always opt for the more affordable option.
Hopefully, after those repairs are made, your car will look and run like new again. Or at least as it did prior to the crash.
Selling Your Vehicle After an Accident
Unfortunately, if you ever go to sell that vehicle, its history will instantly reveal to a buyer or dealership that it has been in an accident. Even if the damage has been properly repaired and no signs of the accident remain, it will still hold a lower value for buyers.
For individual buyers, they may worry that there is lasting damage from the accident. Or worry that it will have a shorter lifespan because of that damage. Dealerships may be hesitant to buy used cars that have been in accidents because they know that their buyers will be able to find out the vehicle’s history.
In short, while you may get your car repaired to the state that it was in prior to the accident, it won’t have the same value that it once did.
Luckily, you may have an option for getting compensated for some or all of that lost value. This is where a diminished car value claim comes in.
What is Diminished Value?
After a couple of years of normal wear and tear, it makes sense that the value of your vehicle will decrease. It also makes sense that when you get into an accident, your vehicle instantly loses a lot of value.
That’s where insurance steps in. You pay for health insurance month after month to offset the cost of emergency medical care if a big bill happens to come your way. In the same way, car insurance is designed to offset the costs of an accident. You pay your car insurance each month, and, hopefully, never have to use it. But if you do in fact find yourself in an accident, those car insurance premiums that you dutifully paid cover the cost of repairs so that you don’t have to pay for them out of pocket.
If your car insurance only pays for repairs, though, they aren’t truly paying to replace the value that your car has lost. For this reason, victims of car accidents may opt to request the diminished value of their vehicle from the insurance provider.
Diminished value refers to the difference between the market value of your car before the accident and after it. This covers the lost value that you would experience if you tried to sell your car after the accident, with repairs done but with the accident still on your car’s history.
There are actually three separate types of diminished value that a car insurance provider may pay.
Inherent Diminished Value
Inherent diminished value is the most common type of diminished value paid following an accident. It's also the most widely accepted type by insurance companies. This term refers to the value that is lost because a car now has a history of damage. This history is something that future buyers could easily access, which means that it will lower the resale value of the car, regardless of any repairs that are made following the wreck.
With inherent diminished value, it is assumed that proper repairs were made to the vehicle. These repairs should be done by an experienced body shop or mechanic. And that the repairs should restore the rest of the value of the car. This means that the only value lost is that that is directly related to having an accident in its history. In most cases, this also means that the damage was not extensive and that it was possible for the car to be fully repaired and restored.
This isn’t always the case. Certain damage may be able to be repaired. But not the full quality and condition that it was prior to the accident. Another type of diminished value covers those repairs that do not bring the vehicle back to its condition prior to the car accident.
Immediate Diminished Value
This next type of diminished car value claim is rarely used. Immediate diminished value refers to the value of your car immediately after an accident, and before any repairs are made. In most cases, the insurance company pays for repairs to fix any damage caused by the accident. So this type of diminished value is rarely used.
Repair-Related Diminished Value
The final type of diminished value is repair-related diminished value. As we mentioned above, sometimes repairs are not enough to restore a car to the same condition it was in prior to being involved in a car accident.
This is where repair-related diminished value comes in. If the repair is of poor quality, your car might not be the same after an accident. This could apply to how it runs or how it looks. For instance, patches of paint may not match the original color or finish. This would greatly affect the look of the vehicle. Perhaps aftermarket parts were used in the repair. Over time, these parts may not hold up and perform the same as the original, higher-quality parts would have if not for the accident.
There are two main ways that this type of diminished value may come into play. Many car insurance companies will require repairs from a mechanic or repair shop that they approve of. If this is the case, they are also responsible for making sure that those outlets that they choose are carefully vetted and capable of performing quality repairs. What happens if quality repairs are not performed by a mechanic that your insurance provider chose? You likely have a case for receiving repair-related diminished value.
Another instance when repair-related diminished car value claim is justified is if it is not possible to restore a vehicle to its prior condition. This may apply to older cars, such as vintage vehicles or collectible vehicles. If original parts can’t be sourced, the repairs will never bring the car back to the condition that it was in prior to the accident.
How Do I Get My Insurance Company to Pay a Diminished Car Value Claim for My Vehicle in Utah?
Car insurance companies may be there to pay for your vehicle repairs or cover medical bills following an accident. But they are a business. And they do not want to pay more than what they have to after an accident.
For this reason, your insurance company is unlikely to be forthcoming in offering diminished value following a car accident. That doesn’t mean that you don’t qualify for it.
You can request an additional payment for the diminished value of your vehicle from the insurance company. However, they are unlikely to accept it. So how do you get it? Call your lawyer.
A car accident attorney understands the system, as well as how insurance companies operate. They will compile necessary evidence about the value of your car and the effect the accident had on it. They’ll also take over communications with the insurance company in their efforts to get you the compensation that you deserve.
Getting a Check for the Diminished Value of Your Vehicle
If you are the victim of an accident and your vehicle needs repairs, you deserve compensation for the value that your car lost as a result. Unfortunately, most car insurance providers will not be eager to pay for that lost value in addition to the repairs they’ve already paid for.
A car accident attorney can help. He or she will take over all dealings with the car insurance companies. They'll fight for additional compensation to make up for the value that your car has lost. If you’ve been involved in an accident and your car is set to be repaired rather than replaced, it’s time to get a lawyer. Contact a Utah car accident lawyer today to file a diminished car value claim. They'll help begin your fight for the compensation you deserve to help offset some of the lasting effects that being the victim of a car accident can have.