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Has My Vehicle Suffered Diminished Value After My Crash?

When another party hits your car, your vehicle could sustain substantial damage. Massachusetts requires all drivers to carry a minimum of $5,000 in property damage liability insurance. That means that the at-fault party’s insurance company pays up to $5,000 to repair or replace your vehicle.

Unfortunately, $5,000 is not very much money for repairs or replacement. Even a minor rear-end accident could result in more than $5,000 in property damage.

If you have a loan on your vehicle, you could be liable for the loan payments if your vehicle is totaled. The $5,000 would go toward the loan amount, so you would not have any money to purchase a new vehicle.

You could sue the driver for property damage. However, you might only receive a personal judgment against them and never collect on the judgment. 

For this reason, many people purchase insurance that pays their loan in full if their car is involved in an accident. They may also purchase insurance coverage to help pay for repair costs or the vehicle’s value if the at-fault driver’s insurance limits do not cover the claim. 

If the driver has sufficient coverage to pay your property damage claim, you want to ensure that you receive all the money that you are eligible to receive. Always consider discussing your diminished value claim with a car accident lawyer.

What is a Claim for Diminished Value?

You may have your vehicle repaired after an accident. It might look brand new. Someone may never know that the vehicle was involved in a car accident.

However, when you sell your vehicle or trade it in for a new vehicle, the car accident may affect its value. Most dealers and private purchasers check the accident history for a vehicle. If the vehicle has been in a car crash, it could lower the amount a dealer or purchase is willing to pay for your vehicle. 

Diminished value claims seek compensation for the decrease of your vehicle’s value due to the wreck.

There are three types of diminished value claims:

  • Repair-Related Diminished Value — This claim covers the loss of value because of used parts or off-market parts being used to repair the vehicle. The vehicle may also lose value if the repairs were faulty or not completed correctly.
  • Immediate Diminished Value — This claim is for the difference between what you receive for the vehicle “as is” without making repairs and what you could have sold the vehicle for had it not been in a car accident.
  • Inherent Diminished Value — This amount equals the loss of market value because of the collision. It is the difference between the amount the car is worth after repairs and what you could have sold the car for had it not been wrecked.

Diminished value can total thousands of dollars. You deserve to be compensated for this loss of value, but fighting the insurance company might be a difficult battle.

Filing Insurance Claims for Diminished Value

Insurance companies generally do not mention the diminished value nor include the loss in the property damage claim. The insurance company will likely fight a diminished value claim, even if you file the claim with your insurance provider.

Therefore, you need to gather evidence proving your vehicle lost value because of the accident. Evidence generally means estimates from reputable sources, like car dealers and custom repair shops. It is wise to get at least three estimates for a diminished value claim.

Factors that impact the amount of diminished value include:

  • The extent of the damages and repairs to your vehicle
  • The make, model, and year of the vehicle
  • The condition of the vehicle before the accident
  • The current mileage of the vehicle
  • Any history of other accidents or damage
  • The quality of the parts and repairs 
  • The value of the car had it not been in a car accident
  • The current market demand for that specific type of vehicle

There is not a standard formula for calculating diminished value. Market demand can have a significant impact on the amount of diminished value. If there is no demand for the vehicle, the value will be much lower.

It can help to have other evidence proving diminished value, such as copies of invoices for repairs, statements from mechanics about the negative impact of the repairs on the vehicle’s performance, and photographs of the damage before the repairs. 

Do I Need an Attorney to File an Insurance Claim for Diminished Value?

No, you can file the claim with the insurance provider without an attorney. A property damage attorney may not take your case if the value of the claim is low. If you were not injured in the accident, paying a car accident attorney to file a property damage claim could be worth more than the claim.

However, do not give up. Be persistent with the insurance company and demand that it compensates you for the car’s diminished value. You may be able to negotiate a settlement that compensates you for at least some of the diminished value.

You might also consider filing a claim in small claims court. Massachusetts small claims courts handle disputes up to $7,000. First, however, make sure you understand what is involved in filing a small claims complaint, including the cost involved in pursuing the claim.

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