You may have a valid diminished value claim that you didn’t even know about. Unfortunately, just because your car has been repaired and, theoretically, returned to the condition it was in before the accident, doesn’t necessarily mean that your car is worth the same amount of money as before.
As soon as your car has been involved in a car wreck it loses a significant amount of value, regardless of how good a job the repair shop does fixing your vehicle. When it is all said and done, a vehicle that has been in a wreck is worth substantially less than a vehicle that has never been in a wreck, even if both cars look and drive exactly the same. This article will discuss what you need to know to negotiate additional compensation from the insurance company for the diminished value of your car.
What is Diminished Value?
Diminished value is the difference in value between what your car was worth prior to the accident and what it is worth after all the repairs have been made to the vehicle.
If this is difficult for you to conceptualize, let’s look at an example. Say you just bought a brand new vehicle for $30,000. A week after you took the car home, you are hit by an at-fault driver and although you weren’t injured, your vehicle required extensive repairs.
After the repair work is done, your car may only be worth $20,000 now. The $10,000 difference between what the car was worth after you bought it and what it is worth now is the “diminished value” of your car.
You may be wondering why this even matters? It’s because the fact that your car has been in a wreck will now reflect on the title of your vehicle through it’s VIN number. So anyone that may want to purchase your vehicle someday will be able to see that it was in an accident by looking at the vehicles’ title or Carfax report. In other words, this accident will follow you around as long as you own the car.
And a car that has been in an accident is worth less to a buyer than a car with a clean title history.
How to Determine the Fair Market Value of your Vehicle?
There are a number of different ways to determine the value of your car. You can visit sites like Kelley Blue Book or the National Automobile Dealers Association pricing guide to do a quick search of the value of a car like yours, you could look through websites like cars.com or autotrader.com to find cars for sale that are comparable to yours.
Alternatively, you can hire an independent appraiser to review the condition of your car, the repairs that were done, it’s mileage and it’s age to come up with a value of what the car would currently be worth in it’s present condition and if it had never been in an accident. Although this approach will cost you money out of pocket, it may give you the most persuasive value for the insurance adjuster.
Finally, you can take your car to a dealership that you have a relationship with to see if they would be willing to give you a trade in value. If you have a Carmax in your area, you can take your vehicle in and they will give you a written offer to buy your car. Ask if they will tell you what they would have paid had your car not been in an accident.
As a quick note, remember that if you take a car to a dealership, they are going to give you trade-in value, which is much lower than the retail or private sale value. If you are negotiating the diminished value of your car, this isn’t a huge deal, but if you are still negotiating repairs or the value of the car because the adjuster wants to “total” it, then this difference in value is important.
How to Negotiate the Diminished Value of Your Car
One you have a fairly good understanding of the diminished value of your vehicle, you will want to send a demand letter to the insurance company asking for them to pay that value. In that letter, you should explain what you are asking for, and how you came to that valuation. Make sure to include any evidence that supports your diminished value contentions, and remind the adjuster that is was there insured that cause the damages to your vehicle.
After you have sent your initial demand letter, the adjuster will contact you to make their initial offer. Don’t be surprised if their offer is lower than you would like. You can ask the adjuster to provide an explanation of how they came up with their dollar figure.
If the difference between what you are claiming the diminished value of your vehicle is and what the adjuster says the diminished value of your vehicle is is greater than $2,000 or 25% of the value of your car, then there is a procedure found in § 20-279.21 of the North Carolina Statutes that allows you each to pick an appraiser who will each come up with an assessment of what the diminished value of the vehicle is. They will then compare there appraisals and assuming they can agree, then both you and the adjuster have 15 days to object to their value.
If you don’t object, then the appraiser’s valuation becomes binding on both you and the adjuster.
If you have a question for us, you can submit it confidentially online by clicking here. You can also call The Hart Law Firm at (919) 460-5422. We are happy to speak to you and answered any detailed questions you may have.