A car that has been in an accident will decrease in value, even if it’s been extensively repaired. This is partly because buyers are less likely to want to purchase a car with a history of damage. This loss of value due to a collision or other accident is known as diminished value.
Diminished value can impact consumers when they try to sell their car or obtain trade-in value on a car when purchasing a newer model. In some cases, consumers are able to file a diminished value claim with their insurance provider and recoup some of the losses from the decreased value of their vehicle.
Types of Diminished Value Claims
Inherent Diminished Value
Inherent diminished value is one of the most common types of diminished value claims and refers to the value that a car loses just by being in an accident, even after proper repair. Even if the repairs leave the car in good-as-new condition, just the fact that it has a history of damage makes it decreased in worth to potential buyers.
Immediate Diminished Value
Immediate diminished value refers to the worth of a car after an accident, but before repairs. This type of diminished value claim is less common.
Repair-Related Diminished Value
If your car undergoes unsatisfactory repairs after being damaged in an accident, you may experience repair-related diminished value. This can occur if generic parts are used in a repair, or if portions of the vehicle are repaired using a different paint color.
When to File a Diminished Claim
Car owners should file a diminished value claim if they experience an accident in which they’re not at fault. In all states except for Michigan, drivers may receive compensation for diminished value if the accident was the fault of another driver. If you’re at fault in an accident, or if you damage your own vehicle while driving, you are generally ineligible for a diminished value claim.
For example, if you are rear-ended by another driver and need to get your bumper replaced, you’ll probably be able to file a diminished value claim. But if you accidentally back into a lamppost and damage your bumper, you won’t be eligible to file.
In order to file a diminished value claim, you should first get your car repaired in order to figure out how much damage has been sustained. Then contact your insurance company and provide proof of diminished value.
When Is Diminished Value Covered?
Diminished value is almost always covered if you’re in an accident in which the other driver is at fault. In general, diminished value is not covered if you’re at fault in a collision with another vehicle, or if you damage your own vehicle while driving. If your car insurance policy includes collision coverage, it most likely also includes diminished value coverage.
What if the Other Driver Is Uninsured?
If you’re in a car accident and the other driver is uninsured, you may still be able to file a diminished value claim. You should check with your insurance provider to see if diminished value is covered under your uninsured motorist coverage.
How to File a Diminished Value Claim
In order to file a diminished value claim, you should first determine whether or not you were at fault in an accident. If you were not at fault and hope to file a diminished value claim, the next step is to get your car repaired by a reputable mechanic.
If you have collision coverage, these repairs will likely be covered by insurance. After your car is repaired, you should reach out to your insurance provider and submit a diminished value claim as soon as possible.
What states will pay diminished value claims?
All states except for Michigan allow drivers who are not at fault in an accident to file diminished value claims.
What can you do if your insurance will not pay diminished value after your car accident?
If you are eligible for a diminished value claim but your insurance provider refuses to pay diminished value after a car accident, you should contact your state insurance commissioner to see if they can help. You may also want to hire a lawyer if you wish to pursue your claim further.
Does car insurance pay diminished value?
In many cases, car insurance does include a diminished value claim payout for a damaged vehicle provided you have collision coverage and were not at-fault in the accident. Check out our list of the best car insurance companies.
How do you figure out diminished value after a car accident?
First, determine the value of your car before the accident using sites like Kelly Blue Book. Then, you can get a professional evaluation concerning the value of your car post-accident. In some cases, you may also be able to ask your car dealership what the trade-in value of your car would be. If you subtract the current value of your car from the value of your car before the accident, you’ll get the number by which your car diminished in value as a result of the accident.