Experiencing a car accident is traumatizing, but the consequences reach far beyond the initial crash. In addition to any injuries and damage caused, accident victims must also face the financial losses associated with selling a vehicle that was in an accident.
Owners may not feel the impact of that expense until years after the wreck. However, it affects individuals just as profoundly then as it would have shortly after the accident, and insurance companies are often no help at all.
What Is Diminished Value?
There are three kinds of diminished value, but its definition is best understood as the monetary loss a car owner suffers after selling a vehicle that was in a crash. Owners may have to accept thousands of dollars less than expected because buyers are reluctant to purchase a car that was involved in an accident.
There are three types of diminished value:
Immediate: The loss individuals suffer for the resale or trade-in value of their vehicle directly after a crash
Inherent Diminished: The financial loss individuals experience after repairing a car and attempting to sell it or trade it in
Repair-Related: The loss experienced as a direct result of the repair's quality (for instance, a new paint color doesn't match other parts of the vehicle)
Unfortunately, insurance companies may not have to cover these losses.
Won't My Insurance Pay for the Losses?
In all states except Michigan, insurance companies are expected to pay for diminished value losses if the other driver was responsible for the accident. While this may appear to be cut and dry, there are a variety of measures insurance companies take to avoid paying for these losses, and state laws differ in their regulations.
Generally, if a motorist demonstrates the other driver was clearly at fault, the insurance company will cover the losses. In these instances, however, at-fault drivers may not have the assets or insurance to pay adequately. If that is the case, the not-at-fault driver may not receive their money back unless they have additional uninsured or underinsured motorist coverage.
Even then, policies vary.
In instances where their policyholder was at fault, most insurance companies will refuse to pay for the diminished value of a vehicle.
Finally, insurance companies may deny coverage because of inadequate documentation, as it is the policyholder's responsibility to provide paperwork demonstrating their losses.
Always check your state laws and scrutinize your policy to fully understand if your insurance will compensate you.
How Is It Calculated?
Insurance companies do not have a single standard to calculate the diminished value. Even if paperwork clearly shows a particular loss, the exact number may be disputable.
Obtaining compensation for diminished value costs is not impossible, and policyholders should never accept a wrongful denial. If an insurance company has denied your diminished value, speak to an attorney to determine if you could pursue compensation. Doing so can alleviate the financial burdens caused by accidents and help you obtain a better, newer vehicle.
