Did you know that even a minor fender-bender could reduce the value of your car by thousands of dollars?

That’s right – while car repairs are necessary to restore a vehicle’s functionality and ensure that it is safe to drive, they do not completely erase the impact of an accident on the value of the vehicle. Why?

Well, potential buyers are almost always hesitant to purchase a used vehicle that has been in an accident, even if it has been repaired properly. The stigma of an accident lingers, and buyers may assume that there are hidden problems with the car that are not immediately apparent.

Diminished Value

This loss of value is what we call diminished value, and it can be significant – in some cases, a well repaired car with original parts may be worth 30% less than an identical car that has never been in a crash.

On average that can range from between $4000 on a Honda Civic you got a few years back to figures upwards of $150,000 on that fancy Lambo you got last Christmas.

Luckily, most states recognize and accept claims made to recover this loss in value. But it’s not something that insurers publicly advertise and do not offer unless the consumer inquires about it and then provides adequate documentation to support it.  It is estimated that insurance companies are pocketing 100’s of millions of dollars annually from unclaimed Diminished Value claims.

Let’s be clear, claims for diminished value in auto insurance are separate from the costs of repairing physical damage to your vehicle. Diminished value claims seek to recover the lost market value of your car due to an accident. And unlike normal claims, you typically file these with the at-fault driver’s insurer – rather than your own insurance company.

To assist with making a claim, you can consult an appraisal expert who can determine the diminished value of your car and help you demand the appropriate compensation. Even if the insurer offers a negotiated amount, it’s important to remember that half a loaf is better than no bread.

What is a diminished value appraisal?

To initiate your claims, you have to seek out an independent appraisal from auto appraisal experts experienced in diminished value. Coming out with a diminished value figure isn’t just plugging numbers into a calculator and hoping for the best possible output. There are many variables to consider; from the type and age of a vehicle, its pre-accident condition, the severity of damages, and many others. Assessing the diminished value is a timely, complicated, and costly process.

Speaking of cost, most reputable appraisal experts charge $400-700 dollars for their professional services. But with average claims pay-outs starting from $5000, that’s a nice return on your investment.

Back to the appraisal process, the auto appraisal expert will now calculate the amount of the diminished value and prepare an appraisal report. This report will be used to support a claim for compensation from the insurance company.

Appraisal businesses are businesses just like any other so watch out for biased and misleading appraisals from experts claiming to maximize (“inflate”) your claims. Insurance companies are aware of this, and they will simply refuse your claim or worse, stuff your appraisal report in the dusty back cabinet, never to be seen again.

You should reach out to independent appraisal experts who follow industry standards and produce appraisal reports in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). Doing so will make insurance companies prioritize your claim, and get back to you sooner – and in case they ignore it, you can ping up Uncle Sam, a situation they try to avoid at all costs.

Filing a Diminished Value Claim

It’s important to note that each state may have its own statute of limitations, which means you need to file a claim within a certain time frame from the accident. Waiting too long could risk you missing out on your opportunity to make a claim. Pennsylvania allows 2 years where NC allows 3 years.

It’s usually a good idea to file a diminished value claim with the at-fault driver’s insurer as soon as possible, ideally, right after the repairs have been completed. When you file early, it can be easier to present your case with all the supporting documentation. Plus, the longer you wait, the more likely it is that the value of your car will decrease.

Here are some steps you can take when making a diminishing value claim:

• Gather documents and pictures of the damage to your car and any repairs that have been made.
• Hire a professional and USPAP-compliant auto appraiser to assess the diminished value of your car.
• Write out a demand letter to the at-fault driver’s insurance company (attach with appraisal report)
• Negotiate a fair settlement with the insurance company for your diminished value claim.

More likely than not, (if your claim is valid) insurers won’t be willing to pay the full amount you ask. This happens for many claims in general so don’t be alarmed. Simply a bad and necessary evil the insurance industry has adopted for decades.

If you’re having trouble getting the compensation you deserve, here’s a trick: threaten to make a complaint with your state’s Insurance Commission. Insurance companies are more afraid of insurance commissions than a cat is afraid of a cucumber! The threat of a complaint can often be enough to get you paid.

But if they still won’t budge, don’t worry. You can go ahead and file a complaint with the State Insurance Commission. They’re there to help you settle your claim and get the compensation you deserve.

And if that still doesn’t work, you can sue the insured driver in a Small Claims court. Don’t worry, it’s not as scary as it sounds. A small Claims Court is like the People’s Court – it’s made for regular folks like you and me. No fancy lawyers required! And if you can keep up with the drama on “Judge Judy,” then you’re already a pro at Small Claims court.

Who Can File a Diminished Value Claim?

So who’s eligible to file a diminished value claim after a car accident? Let’s break it down:

• The other driver must be at-fault, with adequate insurance coverage. You’ll be filing against the Property Damage portion of their coverage.
• You own the vehicle. If the vehicle is financed, that is ok. Leased vehicles typically aren’t eligible as owner privileges will belong to the lessor i.e. banks, the vehicle manufacturers finance companies etc.
• Vehicle has not been involved in prior accident’s.
• Vehicle has under 100k miles and less than 7 years old.

If you happen to get in an accident with an uninsured or underinsured driver, you can still file a claim with your own insurance company, but only if you have uninsured motorist property damage coverage.

In addition, if your car is totaled, you won’t qualify for the diminished value claim as you’ll just get one check from your insurance company for the pre-accident value of your car which will compensate you for the full value of it.

Final thoughts

Even a minor accident can seriously hurt your car’s resale value. But don’t worry, you can fight back with a diminished value claim! Just make sure to get an expert auto appraiser to evaluate the damage and back up your claim.

And don’t wait too long – there’s often a time limit for filing. It’s also important to find an appraiser who follows the industry’s best practices and produces reports in line with the Uniform Standards of Professional Appraisal Practice (USPAP). And if the insurance company refuses your claim, don’t give up – you can always file a complaint to your state’s Insurance Commission or even take the driver to Small Claims court.

Owning a car is not just a fun experience for an average American, they are also an important investment. Like all investments, they yield utility if properly cared for.

If you’re looking to protect your car’s resale value after an accident, consider reaching out to us. By working with Rectify, you can be sure receive an accurate and thorough appraisal of your car’s diminished value and we’ll help ensure you receive a fair compensation from your insurance company.

Armed with this knowledge, you can confidently navigate the tricky waters of auto insurance and get the most value out of your coverage. So go ahead, rev up that engine, and hit the road with peace of mind, knowing that you’re covered in case of any mishap!