Can I Claim The Diminished Value Of My Car After An Accident?
Did You Know You Can Also Make a Diminished Value Claim?
The answer is, maybe, depending on how hard you can fight, and the amounts of insurance coverage to pay, as will be discussed. To begin with, a car that has never crashed could lose significant resale value even when repaired after an accident. So let's begin—no question about it, in California's car culture our, whips reign supreme. As personal injury lawyers, we find that many of our most severely injured clients are more concerned about their autos than themselves. And when one of our clients owns a classic, custom, or sought after brand name cars like a Mercedes S-Class, or BMW M-5, many owners complain that:
"My car is no longer cherry," or "I will never get what my car is worth now, can you get me money for the loss of value?"
Many of our clients are shocked when they discover that the defendant's and even their auto insurer will fight tooth and nail to pay far less than a car is worth, let alone pay money for its lost value. Most insurance adjusters are professional wordsmiths and taskmasters. They will argue that even though there is automobile insurance covering your vehicle, all you can get is enough compensation to restore your vehicle to its same look before the collision.
And since injury lawyers don't usually get part of the property damage payout, they are not exactly excited about going to bat for you to get more. As such, only the savviest and most sophisticated personal injury lawyers understand or even care that a car, any car, automatically loses its worth after a crash. Even a high-end vehicle insurance adjuster will argue with owners about filing a diminished value claim to try to recoup the loss of value of their car after a wreck.
What Is A Diminished Value Claim For A Motor Vehicle?
In a nutshell, a diminished value claim is a situation where a car owner or their lawyer demands the difference between the current market value of their model and the make of the car before the wreck. But there are many types of diminished value claims for a vehicle, as discussed below.
What Are The Different Types Of Diminished Value Claims?
- Repair-Related Diminished Value.
Like it sounds, repair-related diminished value has to do with the loss of value of your car due to the repairs themselves. Most of all, it has to do with a repair shop's failure to use OEM, original parts, and instead use aftermarket parts or supplies. Many leasing companies will ding you for any post-accident repairs made with low-end parts, or related items. So it's not just vehicle parts. What if your repair chop used Chevy paint to spray the repaired area, instead of the original, factory Mercedes Benz paint, for example? Maybe the paint is the wrong color, or looks like an orange peel pattern? Or how about when the repairman uses a non-original bumper, or headlamps, etc.? So basically, you have two issues with these cases.
One issue is the quality of the repair, and the other is the items used to make the repairs. In either situation, low-quality goods and services mean a lesser value at the market when the vehicle is listed for resale. And this is particularly the case with a classic car, such as a 1957 Porsche 356 A, for example. Super cherry car like that, even if you can find the original parts, will never get the full value at the market because it is no longer cherry. So how do you reconcile all of this? First, you need to look at the coverages and exclusions for your insurance policy. If you don't have full coverage, the other party may not have enough to cover all the damages, let alone enough to pay the diminished value. So when a car cannot be restored to its original condition, what happens?
Most of the time, the insurer will try and argue that they will only pay the depreciated value of your car. This is normal in cases of a total loss. But that is a non-sense argument because it does not address that a crashed car, even when depreciated for normal wear and tear, is still diminished in its actual value when compared to a used car that did not crash. Eventually, if you fight hard enough, the insurer may finally attempt a 17c calculation, discussed below.
- Inherent Diminished Value.
Generally, an insurer will try and pay what's known as the "inherent diminished" of your car. And that happens when a motor vehicle loses value because it now has a history of damage, which is indicated in the car’s title. But this type of diminished value claim might ignore that the wrong paint or parts where used, as discussed above. So, in that case, the insurer is underpaying the claim. Moreover, this remains true regardless of repairs after the accident, because the repairs had been wrongly made.
- Immediate Diminished Value.
This type of claim is rarely deployed since most people don't take a property damage claim to court. Here, the resale value before the damage, and immediately after, gets calculated by the auto's insurer or a court. Since the insurer was directly involved in adjusting and had control of the repairs and claims adjustment, the insured or third-party claimant will argue the repairs completed wrongly, or not at all. Because of this, the vehicle is not in the proper condition to achieve a par value sale.
What Are The Steps In Making Diminished Value Claims?
As noted above, a formula known as 17(c) will often be utilized to determine the amounts due and owing for a typical diminished value claim.
"Most insurance companies use a calculation known as “17c” to arrive at a monetary value for your car in post-wreck condition. This formula was first used in a Georgia claims case involving State Farm and derives its name from where it appeared in the court records for this case – paragraph 17, section c." (Source).
Let's look at the steps you or your lawyer need to take to calculate 17(c) diminished value below.
- Hire an expert to calculate the pre-collision worth of the vehicle. Although many people think you can use the NADA or Kelley Blue Book, most insurance companies in California will not accept this dollar amount. Instead, the adjuster will want to compare the value of the vehicle based upon cars in substantially similar years, conditions, and models and odometer readings in the geographical markets. The adjuster will likely want to use "The Auto Trader" and similar publications to do so.
- Use of a 10% cap on total vehicle value - Next, the insurer will typically use a 10% cap, commonly referenced as the "base loss of value." And this is most your insurance company will pay out, since that is the formula recognized by the courts.
- The damage multiplier - Next, the insurance company will utilize a damage multiplier to adjust the vehicle's calculated worth as discussed in step two above. It's a bit complicated, but in a nutshell, the 10% cap becomes multiplied using numeric amounts from 0-1 based upon any structural damage occurring during the crash. The so-called "zero-multiplier" formula means there is zero structural damage or that no panels had been replaced. Next, the one multiplier serves as the figure for a motor vehicle with horrible structural damage. Below is the typical scale used by adjusters to achieve step 3:
- 1.00: Severe damage to the vehicle structure.
- 0.75: Major damage to panels or vehicle structure.
- 0.50: Moderate damage to panels or vehicle's structure.
- 0.25: Minor damage to any panels or the structure itself.
- 0.00: Zero structural damage.
- Utilize the mileage multiplier - The insurer will calculate a mileage deduction based upon their formula. So basically, the adjusted value of the auto discussed in step 3 above gets multiplied using the mileage multiplier. Hence, the diminished value of the automobile boils down to this formula
- 1.00 – 0-19,999 miles.
- 0.80 – 20,000-29,999 miles.
- 0.60 – 40,000-59,999 miles.
- 0.40 – 60,000-79,999 miles.
- 0.20 – 80,000-99.999 miles.
- 0.00 – 100,000+ miles.
Many people have now started to believe they know a lot about car accident claims. Mostly they have read the information on the internet about suing and getting money. This belief couldn't be more wrong. The misinformation from insurance companies keeps people from knowing the truth of the matter. While filing claims for the vehicle damages done in an accident, most people completely forget about the diminished value.
Do I Have A Claim?
If you or your loved one's car got wrecked in an accident caused by the negligence of another driver, you do have a diminished value claim. Should you go for it? Are you prepared for the hassle of handling this matter? Is this case worth all the time and energy that will get spent on it?
The short and easy answer to all the questions is that you must go for this claim. This is because it is worth every second of your effort and struggle to negotiate from strength. Here are some common reasons below. These cover why so many people don't fight for the compensation of the diminished value of their cars after wrecks.
- First, even after browsing the deepest corners of the internet and obtaining all the useful information they can about car accident claims, people remain misinformed about them. Car insurance companies spread this perception. So these companies keep people under the impression that a diminished value claim does not apply to a particular state. But that is sheer misinformation. Also, this is one way malevolent adjusters try killing one of your many rights. They will frustrate your making claims for the damages done to you and your car in a wreck.
- Another reason people avoid these claims is that they are already underestimating the value of their cars. Most people believe only an expensive car's diminished value is worth a fight. So they are under the impression that a used Toyota's reduced amount is not worth a fight. Perhaps the costs of fighting don't merit the upside? This hesitation is often a wrong assessment of the situation. But no matter what type of car you have, you must file the claim for its diminished value. Even if your vehicle was in use for years, consult with a lawyer. Let your lawyer decide whether or not it is fit to fight for a diminished value claim.
- As mentioned above, people don't usually claim the diminished value of their cars. Typically, it's because they don't think it is worth the pursuit. They avoid such a claim because they don't want to hassle themselves. It's often another claim which, to them, doesn't sound significant. Only an experienced lawyer can help these people come out of this mindset. He can tell the people how valuable the claim is and why fighting makes sense. Once again, people should talk to their lawyers instead of reaching the results themselves.
What About The Hassles & Complications Of Pursuing A Diminished Value Claim?
Due to the unwillingness of insurance companies to pay the diminished value of cars claims, things can get quite complicated. For example, when you try to file this claim. It is to say that the case will be nearly impossible for you to handle. But you will need to talk to an experienced lawyer and see the potential of the claim.
Not pursuing it at all is not advisable. You must keep in mind that every dollar lost in the resale value of your vehicle, means money coming out of your pocket some time or another. Whether or not you want the wrongdoer to pay for it depends on your take on the case.