Even if car repairs meet the highest quality standards, potential buyers may not be willing to pay as much for a vehicle that has been damaged in an accident. This difference between the car's pre-accident market value and its post-repair market value is known as diminished value. Diminished value, also referred to as a decrease in value, is the loss of a vehicle's market price after an accident. Why does this happen? The value of a car decreases after an accident because the consumer's perception of its worth is altered. Even if the car has been fully repaired with original parts from the manufacturer, its value will still be lower than before the accident. To recover the diminished value of a vehicle, consumers must file a reduced value claim with their insurance company.
Working with experts in low value claims, such as collision claims, can help you successfully collect for the decline in your vehicle's worth. This type of decreased value assumes that the repairs were of optimal quality and represents the amount that the value of the vehicle will decrease due to its accident history. A notable exception is Georgia, where you can claim a decrease in value in both at-fault and no-fault accidents. All states, except Michigan, allow some level of diminished value claim to be filed if the other party is at fault. Filing a reduced value claim can be more complicated than filing a claim for other issues, since you must prove the decline in your car's worth. If your reduced value claim is denied or if you receive a low offer, you'll want to negotiate first.
Although there is no diminished value calculator that applies in all cases, insurers usually use the 17c formula or a modified version of it. The qualification for a reduced value claim is determined based on circumstances, status, and insurance policy. The diminished repair-related value refers to the loss of value of the vehicle depending on the quality of repairs performed after an accident. The reduced value of this type of vehicle represents the difference in resale value immediately after an accident and before it is repaired. A reduced value or decreased value claim can help recover the loss in value you may suffer when you sell your car or exchange it for another vehicle. The time period for collecting the diminished amount will vary depending on each state's statute of limitations for first-party claims (contractual) and third-party claims (non-contractual).
Understanding how insurers calculate the decrease in value will help you negotiate optimal compensation. The immediate diminished value is calculated as the difference in the resale value of a vehicle immediately before and after an accident.
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