Insurance may take care of all the needed repairs after an accident. However, sometimes your losses during an accident may exceed the dents and scratches. After an accident, your car should at least come close to its original state, especially in terms of cost. Thus, if your vehicle becomes less valuable in an accident, you have a right to file for a diminished car value claim. In most cases, you will realize this when you are about to sell it where the buyer will prefer a similar car being sold by a different person over yours. Under such circumstances, if your claim is successful, the insurance company will find the difference between the original price of the car and the current cost and pay you that amount. In this article we will go through the various key points to note on the diminished value of a car.
What Is The Meaning Of The Diminished Value Of A Car?
A car is a depreciating asset. However, its value can only depreciate up to a certain extent from its original cost. Therefore if you are involved in an accident and realize your car has gone way below its market price, you can file for a diminished value claim. If another driver has caused the accident, you can claim both the reduced value and property damage liability share from their insurer at the same time. The insurance company will pay you the difference between the original cost and the current market price. Therefore you will not be at a complete loss when you sell your machine.
Diminished Value Claims
Below are some types of diminished value claims, you will frequently encounter when trying to file a claim;
Inherent Diminished Value
Inherent diminished value refers to the market price of a car after it has been repaired. As car repairs after an accident can bring back the vehicle to its new state, its value will not remain the same. The depreciation is because the car may develop some complications later; hence buyers may be skeptical about investing so much money. This type of claim is the most common among car owners who intend to sell their cars.
Repairs Diminished Value
Sometimes mechanics can use low-grade spare parts to repair your car. In such circumstances, the value of your vehicle will automatically depreciate. However, you can always recover if such happens to you. You can file for a repair diminished insurance claim. The diminished value under this claim assumes that the car cannot be restored to its original state. If you have cars such as Mercedes or BMW, you have to ensure that any replaced spare part is not generic so that you do not incur any losses when selling it.
Immediate Diminished Value
This claim refers to the claim made immediately after the accident before the car is repaired. Despite the extent of the damage, you will get your vehicle fixed. Therefore you can decide to find out its market value before the vehicle is repaired. An immediate diminished claim is rarely used.
Things To Consider Before Filing A Diminished Value Claim
Once you are involved in a car accident, the best thing to do is file for a reduced car claim since the nature of the car will have been interfered with. Here are some of the things you need to consider before filing a claim.
- The value of the car before the accident
- The party at fault- your insurance company will not process any claim if you are at fault.
- State laws- states have different rules guiding the calculation of the diminished car value.
- The other driver’s insurance status
Steps Of Filing A Diminished Value Claim
Once you decide to proceed with a diminished value claim, do not procrastinate and follow through with it to the last step. It is much easier to gather all documents and present them at once. Here are some quick actions you can follow when filing your claim.
- Determine who caused the accident
- Go through your state laws.
- Check the insurance regulations on the diminished value of a car
- Put all the necessary documents together in case they are required during the claim
- Find the reduced value of the vehicle. To do this, you can look for an appraiser who will help you with the calculations
- File your diminished value claim and wait for the insurance company to respond
You want to get the most from your claim to ensure you do not incur massive losses when selling your car. However, the process is long, and eventually, the payout may be lower than what you anticipated. Therefore to avoid such disappointments, it is better to have some background information such as the current market value of your car, the market price of similar vehicles as yours, the person at fault and the necessary state laws. Once you have this essential information, it will be easy for you to determine whether to proceed with the claim and the amount of money you will receive.