After your car is in a serious accident with body or mechanical damage, you might be surprised to discover that even if your vehicle is repaired perfectly, it might be less valuable. The market views a vehicle that has been in an accident as worth less money, which will affect your trade-in value or how much you can get when you try to sell your car privately.

The good news is that you may be able to get compensation from your insurance company to compensate for the amount of value by which your car has depreciated.

In other words, you get the difference in the value of your vehicle from before and after the crash.

A Diminished Value Claim Example

The easiest way to explain diminished value claims is with an example.

Let’s say your car was worth $10,000 before the accident. Due to a collision, your vehicle sustained severe body or mechanical damage. After being repaired, your car is in great shape, but the accident history is still on your vehicle’s report. As a result, the resale value of your car might only be worth $6,000 now.

If you file a diminished value claim, you will get the $4,000 difference to reflect the vehicle’s reduced value.

The exact value of the compensation depends on the final diminished value assessment performed by the other driver’s insurance company.

Different Types of Diminished Value Claims

Believe it or not, there is more than one type of diminished value claim. The different types reflect both the timing of when you value the vehicle and how the vehicle’s value is affected. The three types of diminished or reduced value are:

1.     Inherent value: The inherent value type to do with the market value of your car after an accident. Basically, it’s what your vehicle is worth overall. Though the repairs might be done perfectly and restore your car to “like new” condition, the inherent value of the vehicle has dropped.

2.     Repair-related diminished value: This situation results from a mechanic using generic parts or performing work in an inferior way. Due to these “defects,” it is impossible to restore your vehicle to its original condition, and that results in your car being valued for less money.

3.     Immediate diminished value: There’s also a third type of diminished value, referred to as immediate. This figure reflects the decrease in the value of your car while you wait for it to get repaired.

Is Your Car Eligible for a Diminished Value Insurance Claim?

According to the Insurance Information Institute, you might not receive money for your car’s diminished value if you are the at-fault driver in a car accident. However, the rules vary by state, so make sure to check your car insurance contract.

You could also run into complications if the driver who caused the accident is uninsured or underinsured. In cases like these, your auto insurance policy could kick in and cover the vehicle’s diminished value if you have uninsured motorist coverage.

Not sure what the diminished value of your car is and eager to get the maximum amount possible? Contact Diminifaq to get a fairer settlement!