You’re driving along, focused on the road, when suddenly a car sideswipes your right rear fender. Fortunately, you keep control of your vehicle and pull over safely to assess the damage. Everyone is fine, but the other driver caused enough damage that your bumper, taillight, and a panel need replacement. It’s thousands of dollars in repairs covered by insurance, but what might not be covered is the diminished value of your car.
Car Values and Auto Insurance
Welcome to the world of car values and insurance, where accidents—even those not your fault—can bring unpleasant surprises. Auto insurance is supposed to restore your car after an accident, but it may fall short, something you might not realize until years later when it’s time to sell.
That’s because the accident becomes part of your CARFAX Vehicle History Report, which is available to any buyer. Such reports can hurt your car’s resale value, even if it’s been fully repaired.
For example, a dealer might reduce your trade-in offer by hundreds or even thousands of dollars because of the prior accident. Simply put, your car is now worth less than a similar one without an accident history.
About Diminished Value Claims
Luckily, you might have recourse through a diminished value claim. This claim is typically filed with the at-fault driver’s insurer.
A diminished value claim helps car owners recover the difference between the vehicle’s value before the accident and its reduced value after repairs.
Even though your car might look like new, the Carfax report will still reflect the accident, and many dealers will automatically lower its price, even if the repairs are perfect. No, you can’t appeal the report either – what is included remains a part of that report.
Understand State Insurance Laws
Each state regulates insurance, and most allow you to file a diminished value claim with the at-fault party’s insurance. If the other driver is uninsured, you might still file with your own insurer, provided you have uninsured motorist property damage coverage.
Before filing a claim, get your car appraised. You have some option here: take it to a dealer, look for an online appraisal such as with J.D. Power, or hire a professional appraiser. If your car was worth $22,500 before the accident but appraised for $18,000 after repairs, you’ll want to recover that $4,500 difference.
With two-thirds of cars eventually traded in, and dealers relying on history reports, you can expect the value to be adjusted downward accordingly.
File a Diminished Value Claim
To file a diminished value claim, contact the at-fault driver’s insurer and request compensation.
Don’t expect them to cut a check right away. You may need to be persistent, providing an appraisal and supporting data, such as values from car valuation websites.
If the insurer agrees to compensate, it might not be for the full amount. They may use their own formula, which could provide a lower number. Negotiate for a better settlement, but even recovering most of the difference is better than nothing.
If the insurer refuses, you can take them to small claims court or hire an attorney, especially if your car is new or valuable. Just remember, legal fees come out of your pocket, reducing your final settlement.
Review Your Auto Insurance Policy
Car accidents can cause emotional and financial stress. Regularly review your auto insurance policy, and discuss your coverage options with your agent. Be sure to understand your state’s insurance laws and look for ways to reduce your risk and close any gaps that could result in a financial loss. The time to make that change is now, before an accident occurs.
See Also — Managing Rising Auto Insurance Costs
Image courtesy of Adobe Stock Photos under free license.
