What Is Diminished Value of Cars?

When it comes to diminished value claims in cars, many people have limited knowledge. If not, they are ignorant such that they may not even know if they qualify to benefit from these claims. Today we look at this topic in-depth to help you understand what you should do if an accident diminishes the market value of your car.

Before answering the question, here’s what you need to know: Following an accident, your insurer or the other driver’s insurer will decide to either repair or replace your car altogether. It all depends on which alternative will be cheaper. Keep in mind that sometimes the cost of repairing a wrecked car can be higher than the cost of replacing the car. Instead of giving you a new car, your insurer or third-party insurer will fix and restore your car if they determine that it would be cheaper to repair than to replace the car.

Notably, a car that has been in an accident will have a diminished value even if it’s restored to almost its original (brand new) state. In this context, diminished value refers to the difference in the market value of a car before and after an accident. Now, your insurer or third-party insurer may decide to compensate you for the diminished value of your car. To get compensated though, you’ll need to file a special type of claim known as a “Diminished Value Claim.”

What Is a Diminished Value Claim?

A diminished value claim is a type of car insurance claim to compensate a car owner for the drop of their car’s market value, following an accident. How does diminished value claim work?

To explain that, consider the following example:

You have a nice car whose market value is $60000. Then you get in an accident but your insurer or third-party insurer (depending on who was at fault between you and the other motorist) decides to restore rather than replace the car because it’s cheaper that way. After restoring the car, its market value diminishes by $10,000. By filing a successful diminished value claim, you can have your insurer or third-party insurer compensate you for the diminished value after the process of diminished value appraisal.

What Is Diminished Value Appraisal?

It’s the process whereby an authorized insurance professional determines the value of the loss of value suffered by a car that has been restored following an accident. This determination cannot be made by a non-professional who lacks the needed knowledge and training. After the process, the professional will issue a diminished value appraisal report that your insurer or the other motorist’s insurer should accept.

There is no special formula for calculating diminished value on cars. The Supreme Court ruled, years ago, that each case must be defined on its own merits. Sometimes, insurance companies will try to enforce a formula that can be too complicated for many people to understand. Luckily, you can use a special diminished value claim calculator to get around it. There are plenty of those online. Just type “car accident diminished value calculator” and Google will find you several results.

How to File for Diminished Value

1. First, determine who was at fault. If it was you, then you’ll have to file the claim with your insurer. If it was the other motorist, you’ll have to deal with their insurer as opposed to yours.

2. Second, check what your state laws and the rules of the insurer you’re going to be dealing with say about diminished value claims. If they are in your favor, proceed to the next step.

3. Find a licensed professional to assess and do a diminished value appraisal on your car. After the professional issues you with a signed appraisal report, proceed to the next step.

4. Gather the necessary documents that will support the claim. These may include a copy of the police report, a bill from the repair shop, and photos from the accident scene.

5. File the claim by following the insurer’s laid down procedure for doing so.

6. Wait for a response and be responsive if the insurer gets back to you. This will help expedite your case. Staying in touch, asking for updates every few weeks, and even hiring an attorney as an intermediary are other great ways to make the insurer act quickly on your case.

Diminished Value Claims in Maryland

There’s no denying the fact that the state of Maryland is home to many firms that provide diminished value claims solutions. If you live here and you would like to file a diminished value claim, just find a good firm online to help you with the process. You can find a few good firms from the comfort of where you are by typing a simple search query like “Auto diminished value appraisal near me.” Once you pick a good firm, file your claim by following the process above.

Final Thoughts

If an accident diminishes your car’s market value, you can get compensated for that if you file a successful diminished value claim with an insurer. Restoring your car is not enough; the concerned insurance firm should also give you some money to cater for the drop in the value of your car after it has been fully restored. I hope that, from this article, you learned what to do if your car’s value is diminished by an accident and how to file a claim to get compensation for that.