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Diminished Value Claims After Car Accidents

March 27, 2024

Diminished Value Claims: Getting What Your Car is Really Worth After an Accident

You were just in a car accident that wasn’t your fault. The other driver rear-ended you while you were stopped at a red light. Your car is drivable, but it has some pretty nasty damage to the rear bumper and trunk area. You file a claim with the other driver’s insurance company, and they agree to pay for the repairs. But even after the body shop does its best work, your car will never be the same – it now has an accident on its record, which diminishes its resale value. This is where a diminished value claim comes in.

What is Diminished Value?

Diminished value refers to the loss in a vehicle’s worth after it’s been in an accident, even after repairs. It doesn’t matter how good the repair work is; the simple fact that the car was in a wreck and has that on its history report means it’s worth less than an identical vehicle with a clean record.Think about it this way: if you were shopping for a used car and had the choice between two identical models, one that had been in an accident and one with a spotless history, which would you choose? Exactly – most buyers would pay more for the accident-free car. That’s the essence of diminished value.There are a few different types:

  • Repair-Related Diminished Value – This covers the loss from inferior workmanship during repairs that can’t be adequately corrected.
  • Inherent Diminished Value – The reduction caused simply by the fact that the vehicle was in an accident, regardless of the quality of the repair work.
  • Claim-Related Diminished Value – Additional loss from making an insurance claim that gets recorded on the vehicle’s history report.

For the purposes of this article, we’ll focus mainly on inherent diminished value, since that’s the most common type after a wreck.

How Much is Your Diminished Value Claim Worth?

The amount of diminished value can vary quite a bit based on factors like:

  • The vehicle’s age, make, and model
  • The severity of the damage
  • The quality of the repair work
  • The car’s mileage and overall condition before the accident

But in general, you can expect the diminished value to be 10-25% of the vehicle’s pre-accident market value. So if your car was worth $20,000 before the wreck, the diminished value claim could potentially be worth $2,000-$5,000.To get a more precise estimate, most insurance companies and attorneys use formulas that factor in things like the vehicle’s age, mileage, and cost of repairs. Two common formulas are:The 17c Formula:
Diminished Value = Repair Cost x 0.17The 10% Formula:
Diminished Value = 10% of Pre-Accident ValueThere are also paid diminished value calculators and appraisal services that can give you a more data-driven estimate, like this one from Diminished Value of Georgia.At the end of the day though, the insurance company doesn’t have to use any particular formula. Your diminished value is whatever amount you can successfully argue for and negotiate based on the specific circumstances.

Do You Have a Valid Claim?

In order to file a diminished value claim, a few criteria typically need to be met:

  1. The accident had to be someone else’s fault, not yours. If you caused the wreck, you can’t recover diminished value from your own insurance company.
  2. The damage has to be significant enough that it gets recorded on the vehicle’s history report (like a CarFax). Minor fender benders that get fixed with just a bit of paintwork usually don’t qualify.
  3. Your state laws have to allow diminished value claims. Most do, but there are a few exceptions like Michigan and North Carolina where they are prohibited.

If those boxes are checked, then you likely have a valid claim. But be prepared – actually getting paid out for diminished value by an insurance company is an uphill battle.

The Uphill Battle with Insurance Companies

Here’s the thing – insurance companies are major corporations, and their #1 priority is protecting their profits. Paying out diminished value claims cuts into those profits, so they’ll do everything they can to avoid it or minimize the payout.Some of their common tactics include:

  • Denying that diminished value is a real thing or claiming it’s already accounted for in the repair costs
  • Arguing that the damage wasn’t severe enough to impact the vehicle’s value
  • Using outdated or unrealistic formulas that lowball the diminished value amount
  • Simply refusing to negotiate or dragging out the process until you give up

It’s an incredibly frustrating process dealing with insurance adjusters on this issue. They have endless resources, while you’re just one person trying to get a fair settlement.That’s why having an experienced car accident attorney in your corner is absolutely crucial if you want to maximize your diminished value recovery.

How an Attorney Can Help with Your Claim

A skilled attorney who specializes in diminished value cases knows all the ins and outs of state laws, insurance company tactics, and negotiation strategies. Here are some of the key ways they can help:Properly Valuing Your Claim
Attorneys have access to data sources and methodologies that account for all the factors impacting your vehicle’s diminished value, not just the basic formulas insurance companies use. They’ll make sure your claim is valued accurately and maximized.Skilled Negotiation
Negotiating with insurance adjusters is an art. Attorneys know what evidence to present, what arguments to make, and how to apply pressure to get a fair settlement offer. They aren’t intimidated by delay tactics.Representing You in Court
If the insurance company still won’t be reasonable, your attorney can file a lawsuit and make your case in front of a judge and jury. This is a credible threat that often leads to better settlement offers before going to trial.Contingency Fees
Most car accident lawyers work on a contingency basis, meaning you don’t pay anything upfront. Their fee is simply a percentage of whatever settlement they obtain for you. So there’s no risk in having them fight for your diminished value.The bottom line is that trying to go it alone against insurance companies on a diminished value claim is an extreme uphill battle. Having an attorney levels that playing field and greatly increases your chances of recovering a fair amount.

Diminished Value Laws and Precedents

The laws around diminished value claims can vary from state to state. Let’s look at a few key examples:

Georgia has some of the most well-established diminished value laws in the country. The state even has an official diminished value estimator that insurance companies must use.In the 2001 case Mabry v. State Farm, the Georgia Court of Appeals ruled that insurance companies must pay diminished value claims if the loss is adequately proven.

Florida law is a bit murkier on diminished value. There’s no statutory requirement for insurers to pay these claims, but the Florida Supreme Court ruled in Zochert v. Gillette that diminished value damages can potentially be recovered.

In the Golden State, diminished value claims are allowed under California Civil Code Section 3333. But the burden is on the claimant to prove the existence and amount of the diminished value.

New York
New York has recognized the concept of diminished value claims in cases like Cramer v. Kicks Unlimited. However, the courts have been inconsistent in how they calculate and award these damages.As you can see, the legal landscape is quite varied across the country. This is yet another reason why it’s so important to have a local attorney who understands the specific laws and court precedents in your state.

Tips for Maximizing Your Diminished Value Claim

While your attorney will handle the heavy lifting, there are some things you can do yourself to help maximize your diminished value recovery:

  • Get the vehicle appraised before repairs – This documents its pre-accident value
  • Keep all repair records and receipts – Proof of the repair costs strengthens your claim
  • Maintain the vehicle meticulously after repairs – Don’t give insurers any reason to argue the diminished value was from neglect, not the accident
  • Resist the urge to trade it in right away – You may be able to get more from a diminished value claim than the trade-in value
  • Be prepared for a long process – Insurers will delay and drag their feet, so patience is key
  • Consider all settlement offers carefully – Don’t just take the first lowball offer; get your attorney’s advice

The insurance companies are not on your side here. Remembering that and managing your expectations accordingly will go a long way.At the end of the day, a diminished value claim simply aims to compensate you for your vehicle’s loss in worth through no fault of your own. It’s about making you truly whole again after someone else’s negligence damages your property.

When to Hire an Attorney

So when exactly should you involve an attorney for a diminished value claim? Generally, these are good times to bring in legal representation:

  • If the insurance company is giving you the runaround, making lowball offers, or refusing to negotiate in good faith
  • If the claim is worth over $1,000-2,000 (attorneys’ contingency fees make smaller claims not worth it)
  • If you don’t have the time, energy or expertise to properly value the claim and negotiate yourself
  • If you want the option of taking the insurer to court if all else fails

The earlier you hire an attorney, the better. They can ensure you don’t miss any filing deadlines and build the strongest possible case from the start.

Conclusion: Don’t Underestimate Diminished Value

When you’ve been the not-at-fault victim in a car accident, you deserve to be fully compensated – and that includes recovering your vehicle’s diminished value. Don’t make the mistake of thinking this part of your claim is trivial or not worth pursuing.A 10-25% loss on a vehicle you own can easily amount to thousands of dollars out of your pocket. And remember, the insurance companies will do everything they can to minimize this part of your settlement.That’s why having an experienced car accident attorney from a firm like Spodek Law Group is so crucial. We know all the tactics and laws involved with diminished value claims. We’ll value your claim accurately, negotiate aggressively, and be fully prepared to take your case to court if needed.Your vehicle’s diminished worth is a real financial loss that you shouldn’t have to bear after someone else’s negligence. With the right legal team on your side, you can recover the compensation you deserve.H2: Common Questions About Diminished Value Claims

Q: Can I file a diminished value claim if my car was totaled?A: No, diminished value claims only apply if your vehicle was repaired after the accident. If it was totaled (deemed a total loss by the insurer), then you would simply receive the pre-accident market value of the vehicle.

Q: Do I need to file the diminished value claim right away?A: Not necessarily, but you typically have a limited window of 1-3 years depending on your state’s statute of limitations for property damage claims. It’s best to file sooner rather than later though.

Q: What if I was partially at fault for the accident?A: In that case, any diminished value award would likely be reduced by your percentage of fault. So if you were 20% at fault, you’d only recover 80% of the diminished value.

Q: Can I file for diminished value if I had the repairs done at a mechanic instead of an auto body shop?A: Possibly, but it will be an uphill battle to prove the repairs were done properly and to industry standards. Using a reputable auto body shop strengthens your claim.

Q: Do I need to pay my attorney upfront for a diminished value case?A: No, most car accident attorneys work on a contingency fee basis. This means they only get paid if they win you a settlement, as a percentage of that settlement amount. So there’s no upfront cost or hourly fees.H2: Don’t Go It Alone – Hire an Experienced AttorneyLook, we get it – filing an insurance claim and dealing with adjusters is a huge hassle even in the best of circumstances. Adding a diminished value component to that just makes the process even more of a headache.But the reality is that your vehicle’s loss in value is a legitimate financial harm you’ve suffered through no fault of your own. You shouldn’t have to eat that cost just because the insurance company doesn’t want to pay up.That’s why having an experienced car accident lawyer from a firm like Spodek Law Group is absolutely essential. We’ve been going toe-to-toe with insurance giants for decades, and we know how to get our clients every penny of compensation they deserve – including diminished value.So if you’ve been in an accident, take the first step by contacting us for a free consultation. Let our team of tenacious attorneys handle the diminished value fight while you focus on healing and moving forward with your life.Don’t let the insurance companies take advantage of you. With Spodek Law Group in your corner, you’ll have the strongest possible representation as we pursue every avenue to make you truly whole again after your accident.

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