It's no secret that a car's value can take a hit after an accident. Depending on the age of the vehicle, the state before the accident, and the state after the accident, it could depreciate up to 25 percent faster than the average rate. But how much does a car depreciate due to an accident? The amount of money itself depends on the type of car, but the general consensus is clear: a car with an accident in its history will be worth less than the same car without an accident. The trade-in value for a dealer will also be even lower.
Sometimes, the value of a car will decrease because of the decrease in its value, which the insurance company calculates when it sends an agent to check your car. The market value of your vehicle is higher when it's new. Once you take it out of the lot, it may lose value. The older your car is and the more miles it has, the lower its value.
After a car accident, the value of your car may drop even lower. This is called diminished value, which is the difference in the market value of your car before and after the accident. Depending on the circumstances of the accident, an auto insurance company could pay for this decrease in value of your vehicle after a covered loss. Understanding this decline in value could give you the tools to successfully file a claim if an accident damages the worth of your vehicle.
According to formula 17c, to calculate this decrease in the value of your car, you must take the value of your vehicle and multiply it by a maximum limit of 10%. Filing a reduced value claim can be more complicated than filing a claim for other reasons, since you must prove that there has been a decline in your car's worth. However, if you can demonstrate this effectively, then you may be able to receive compensation from your insurer. A reduced value or diminished value claim can help recover any losses in value you may suffer when you sell your car or exchange it for another vehicle.
However, if your vehicle is worth much less after an accident, even after it has been restored to its original condition, filing a claim for its diminished value could offset this significant financial loss. The way in which insurance companies determine this decline in the value of your car is what is called the 17c formula. The inherent decline in value occurs when a vehicle loses worth because it now has a history of damage, as indicated in car history reports.Keep in mind that you can't file a claim until you've actually suffered this financial loss, which means you can't file a claim until you trade in your car. It may be because you had an accident the year before and the car has what is called a reduced value.