Diminished Value: Biggest secret about Diminished Value Claims with insurance
What is Diminished Value?
Know your rights if you've been in an auto accident. You may be entitled to a check from your insurance company for a diminished value claim. Diminished value is the automatic loss of value from a auto collision. Almost every vehicle that has been in a wreck will have some form of inherent diminished value.
It has been estimated that 55% of consumers would not buy a car that had been in an auto accident. 81% would not have a car that had been in a wreck unless they were given a large discount. Our survey results show the stigma may be even higher.
Diminished Value isn't something insurance companies generally acknowledge your right to recover!
In their online article about diminished value (later removed from State Farm's website) "Diminished value fact or fiction?" State Farm has tried to discourage consumers from attempting to file a diminished value claim. We disagree. Many times claimants are not made aware of compensation for diminished value. Insurance companies would have you believe they are your advocates when in reality they are your adversaries. Many times insurance companies will reward their adjusters based on minimizing settlements. When a demand for diminished value is made, insurance companies may deny diminished value has happened. Some insurance companies give adjusters scripts to help them lower the value of claims. Claimants need to support their claims with an expert evaluation that diminished value has occurred.
Understanding Diminished Value Claims
Your one-year-old vehicles value is $30,000. One day, you're hit by another car, causing $5,000 in damage. Your auto insurance company pays for the repairs when you filed your insurance claim.
Your newly repaired car is still worth, $30,000 right? WRONG. Although your auto body shop does an excellent job, and your vehicle looks as good as it did before the accident, it's value is now much less and is less desirable having been in a auto collision, should you decide to sell it now, or down the road.
Many times a frame or structurally damaged vehicle cannot be sold as a "certified used vehicle." This will impact the vehicle's value by as much as 40%!
This is where diminished value comes in! Your insurance company will be quick to write you a check for the repairs, but you're entitled to receive another check for a diminished value claim.
If you list your vehicle for sale in the newspaper for $30,000, the first thing a buyer will ask is "Has the vehicle been in an auto accident?"
Once they discovered the accident, the buyer would no longer be willing to pay you $30,000, but instead might offer $22,000. In this case, the diminished value would be $8,000.
$30,000 before accident
-$22,000 sale price
$8,000 in diminished value!
Even if you've already settled with the insurance company on the body damage, you can still file a separate diminished value claim if the repairs were done recently.
Your insurance claim for diminished value can be paid by your own insurance company or the other party's company.