On top of the stress of a car accident because of injuries, you may also have to deal with the stress of repairing your vehicle or buying a new vehicle. You may wonder if the insurance company will give you enough money to get a new vehicle. You likely already knew that your vehicle’s value decreased as soon as you drove it off the lot, but how much more did the accident cost you in value? Just how much does a car depreciate after an accident? Does the insurance company pay for diminished value? Read on for more information from our auto accident lawyers.
How Much Does an Accident Devalue a Car?
On average, a new car depreciates about 20 percent when you drive it off the lot. During the first three years, the car depreciates up to an additional 55 percent. Add a car wreck into the mix, and the valuation will fall even lower. It could depreciate up to 25 percent faster than the average rate, depending on the vehicle’s age, condition before the wreck, and condition after the wreck.
The Value of Your Vehicle Before the Wreck
Your vehicle’s value before the wreck depends on its age, its make, its model, what features you added, its color, and the style of your vehicle. Whether you had previous accidents also figures into the value of your vehicle. Finally, your vehicle’s status as classic or antique also factors into the value.
Your Vehicle’s History of Prior Damages
If your car suffered damage in one or more previous accidents, this will negatively affect its value, even if you had it fully repaired and kept it otherwise well maintained. The more accidents you had, including fender benders, the lower your vehicle’s value before this accident.
The Severity and Type of Damages Your Vehicle Suffered in the Accident
Fender benders affect the value of your vehicle, but not as much as more significant damage. However, if your auto technician can repair minor damage with factory-replacement parts, buyers may not know that your vehicle was damaged in a wreck, since it will show less evidence of repairs.
Why the Value of Your Vehicle Decreases After a Wreck
Because insurance companies may use white-box replacement parts to repair a damaged vehicle, its value may further decline following an accident. In some cases, insurance companies give you just enough money to replace damaged parts with used parts. Using cheap or used parts diminishes the value of your vehicle. However, even if you have your auto technician use factory-replacement parts, anything more than a fender bender will diminish the value of your car.
What Constitutes Diminished Value?
The amount that a vehicle loses value after a wreck constitutes diminished value. This amount involves the difference between the car’s market value before the accident and the market value after an accident. You can determine how much value a vehicle has lost following an accident by considering these losses:
- Repair-related: This constitutes diminished value because you might use used parts or cheaper aftermarket parts to repair your damaged vehicle. Additionally, if your auto technician doesn’t properly repair the vehicle’s body, that will affect the value of your vehicle.
- Inherent diminution: Regardless of the quality of repairs, a vehicle loses value after an accident.
- Claim-related: Insurance companies refuse to pay for quality parts and will often force you to use a less-experienced auto body tech because they do not want to pay the higher cost of a better mechanic.
Will an Insurance Company Pay for Diminished Value?
You will probably not recover diminished value from your own insurer should you use it to cover vehicle repairs while you wait for a settlement or trial award. However, the at-fault driver’s insurance companies bear responsibility for the value your vehicle lost. Your attorney should figure in the diminished value of your car as part of the settlement or trial award. Learning how to get more for your total losses during settlement negotiation can prove complicated. You need to know the value of your vehicle before and after the accident. During a total loss settlement negotiation, you can argue that your car has value to you because it helps you get to work, to the doctor, grocery store, and more, and that you shouldn’t have to bear the financial burden of an accident that someone else caused. Your attorney can help you determine if an insurance company will pay for diminished value. Before you go through the process, you need to determine if the insurance company’s rules allow you to collect for diminished value. Your attorney can review the policy to let you know. If it does, you will need a sworn statement in proof of loss that includes:
- The value of your vehicle from an approved source and photos of the wreck and repairs. You can obtain the value of your vehicle from the National Automobile Dealers Association (NADA).
- The value of your vehicle as appraised by a certified professional.
Finally, ensure that you have all the documents the insurance company requires, along with any other evidence the insurance company requests to prove diminished value. You should let your attorney help obtain your diminished value claim, as insurance companies often deny compensation for diminished value by alleging that you did not prove the vehicle’s value or did not complete the paperwork properly.
Before Filing a Diminished Value Claim
Filing a diminished value claim can prove complicated. Before you file a diminished value claim, consider:
- Your vehicle’s accident history, especially if you bought the vehicle used. If it has sustained significant damage in the past, it likely had a low value before the accident, which makes the value after accident repairs even lower. In this case, it might not be worth asking for diminished value.
- Did you contribute to the accident? If you bear full liability for the accident, the insurance company will likely deny a diminished value claim. If you bear partial liability, it will depend on the insurance policy.
- Value also plays a large part in diminished value. What is the make and model of your vehicle? Some cars retain their value longer. In many cases, if you drive an inexpensive vehicle, you may not have a diminished value claim by the time the insurance company applies the formula to determine the value.
Repairs After an Accident
Because you want your vehicle to have as much value as possible, you should find an auto body technician who takes pride in his or her work and who uses original equipment manufactured parts. The quality of the auto technician’s work is as important as the quality of the replacement parts. You should get at least two estimates, but preferably three, for accident repairs. If the body shop you choose does not do engine repairs, you should also make sure your auto technician knows how to do the repairs. Even so, you might obtain another estimate—another shop might find less expensive original equipment manufactured parts. For example, a dealer might charge $150 for a widget, while a neighborhood shop that most people trust might charge $120 for the same part. The difference will depend on the amount that companies make on the parts. Dealerships and high-end auto repair shops might make over 100 percent on replacement parts, while someone with A.S.E. Certification in a neighborhood shop might make 20 percent on an O.E.M. part.
Choosing a Shop
When choosing a repair shop, including a dealer, make sure the auto technicians have the experience required for the repairs your vehicle needs. Just because someone works at a dealership does not mean that he or she has experience with the repairs you need. However, another mechanic at the same dealership may have completed many similar repairs. This mechanic would likely produce a higher-quality repair. You can also use this comparison between dealerships and independent shops, especially body shops. A body tech at a dealership could have far less experience than the guy down the street who has 50 years of experience in bodywork and painting. Know your mechanics and techs. Do not be afraid to ask for references or to see a body tech’s work.
Working With Insurance Companies and Repair Shops
One of the problems you might run into is that the insurance company might not work with your chosen shop. You can opt to pay the shop, then reimburse yourself when you receive payment from the insurance company. Not many shops will hold a ticket until you get your check from the insurance company unless the insurance company directly pays the shop. Another problem that may arise involves insurance companies that insist on paying only for used or aftermarket parts. The insurance company will have a paragraph regarding what it will pay in the policy. If the insurance company insists on used or aftermarket parts and does not have a clause stating that it will not pay for O.E.M. parts, you could fight the insurance company. Finally, the insurance company might try to force you to use a shop it chooses. If you do not want to use the insurance company’s shop because you do not know the shop or have had a bad experience with that shop, you can insist on using your own shop. However, if the insurance company does not work with that shop, you might have to wait until you get your check or pay for repairs out of your pocket if you need your vehicle immediately—the insurance company gives you what it thinks repairs should cost, and you would just keep the money instead of paying it to the shop, effectively reimbursing yourself.
What To Tell an Insurance Company
Most people contact the insurance company immediately after an accident, which is a good practice since most companies do not give you very long to file a claim. However, when you make that call, you should only give the insurance company your name, contact information, the date and location of the wreck, and your attorney’s contact information. Insurance companies will twist what you say in an attempt to deny a claim or offer a settlement amount that might not cover your medical expenses. Since these companies just want to make money, and your claim dips into their profits, they’ll try to minimize the loss as much as possible. An experienced car accident attorney knows the tricks that insurance companies pull, so the insurance companies may prove less likely to make an unfair offer.
When Your Injuries Prevent You from Handing Vehicle Repairs
If your accident injuries prove so severe that you cannot handle vehicle repairs, you can ask the insurance company to write the check directly to you. You can also include the amount in a settlement if you believe settlement negotiations will result in a fair and reasonable settlement.
After an Accident
Dealing with insurance companies can prove complicated and frequently results in significantly devaluing your vehicle or leaving out the diminished value of a vehicle. Instead of taking a chance on getting the shaft from the insurance company, work with an experienced car accident attorney. Not only will you know that the insurance company has a lower chance of ripping you off, but also you do not have to worry about managing repairs and insurance companies during your recovery.
The Importance of Photos
If at all possible after a wreck, you should take as many photos of the accident scene and your injuries as possible. Not only will these photos help in determining fault in an accident, but they will also help to determine the value of your vehicle and the types of repairs it needs. You should also take pictures of your vehicle after a mechanic has repaired it. The insurance company might require the mechanic to determine the diminished value of your vehicle. If you sustained injuries in an accident, contact a car wreck attorney as soon as possible.