Property damage to your car may be obvious after a wreck, but less obvious is the diminished value of your vehicle. Below, we discuss how to file a diminished value claim in Texas, and why you should bring it up in settlement negotiations.
What Does “Diminished Value” Mean?
After a car accident, the insurance company will typically compensate you for repairs to your car. But a factor that they probably will not take into account is the damaged vehicle’s diminished value.
Diminished value refers to the difference between how much your car was worth before the wreck and how much it’s worth after all repairs have been made. When your car is involved in a wreck, the overall value of it drops. Most buyers do not want to pay as much for a car that has been in an accident. And because many insurance companies do not pay for high value parts or encourage the use of refurbished or used parts, this flawed repair work can also lower the value of your car.
How Is Diminished Value Calculated?
Diminished value is calculated by considering the following:
- Type and extent of damage on vehicle
- Cost to repair vehicle
- Repair quality
- Cost of similar vehicles never involved in an accident
- Market trends
Typically, you shouldn’t rely on the insurance company to valuate your car fairly. That’s why it’s important to work with a car accident attorney who can present an accurate valuation of your vehicle.
What Factors Impact Diminished Value?
There are a variety of factors that will impact the diminished value of your car, including:
Age of Vehicle
Insurance companies may not want to pay diminished value on cars older than seven years. Older vehicles may have lower diminished value, but it should still be considered.
Mileage of Vehicle
Diminished value is greatly affected by vehicle mileage, just like market value. Lower mileage vehicles may get a higher diminished value award, but higher mileage vehicles would also qualify. If your vehicle is over 100,000 miles, the insurance company may not want to pay you diminished value.
Make and Model of Vehicle
Some vehicles are worth more money than others. For example, a diminished value claim for an expensive luxury car would be higher than one for a value brand.
History of Accidents
If your vehicle has a history of other accidents, then its value would already be diminished. The insurance company may not want to pay a diminished value claim because they will claim it was already of low value to begin with. This can be avoided by showing the value of the car prior to the accident, even if there were other accidents in the car’s history.
How to File a Diminished Value Claim
When you file a personal injury claim, property damage will only be one portion of your losses. You must specifically state that you want to make a diminished value claim. In order to qualify, you must show that:
- Your vehicle lost value because of the accident.
- There is a specific dollar amount of value lost.
- The insurance company policy covers diminished value.
You should keep all receipts and estimates that you’ve received related to your claim. Present these to your attorney, who will give them to the insurance agent along with a demand for a diminished value claim. Once the at-fault driver’s insurance company gets a demand for diminished value, they will likely try to negotiate the final amount of compensation. They may try to include diminished value in a settlement along with other losses for the entirety of your claim.