Understanding Diminished Value: What You Need to Know After an Accident

What To Do After A Car Accident

There’s no doubt that if you’ve recently been involved in a car wreck where you were not at-fault, that it ruined your day, if not your entire week (or even month!). You are likely dealing with the insurance company for your claim to get your vehicle repaired, or totaled. If you don’t know what diminished value is, then you definitely should read this article. What you don’t know could end up costing you thousands of dollars! 

Understanding Diminished Value: What You Need to Know After an Accident

When your car has been in an accident, even after repairs, it may not hold the same market value as it once did. This reduction in value is known as Diminished Value. Essentially, Diminished Value is the loss in your vehicle's market worth after it has been damaged, based on the idea that once something has been damaged, it will never be as valuable as it was before.

How Does Diminished Value Affect You?

Diminished Value, sometimes called a depreciated value clause, represents the money you won't recover when selling your car because it's been in an accident. If your vehicle suffered significant damage in an accident that wasn’t your fault, you have the right to file a Diminished Value claim, though the insurance company isn’t likely to tell you this. Even if the other driver was uninsured, you could still file a claim—provided you carry uninsured motorist coverage.

Several factors determine the total amount of Diminished Value:

• Market Perception: A reasonable buyer will not pay the same price for a car with an accident history as they would for one without it.
• Disclosure Requirements: By law, you are obligated to disclose the accident history of a car when selling it.
• Vehicle History Reports: Regardless of how well your car has been repaired, virtually everything you have done to your vehicle shows up on the Carfax report.
• Certification Restrictions: Your repaired vehicle cannot legally qualify as a certified pre-owned vehicle.

Filing a Diminished Value Claim: What You Need to Do

To recover the loss due to Diminished Value, it is up to you to prove the total amount of the loss to the insurance company. You have the right to hire an independent auto appraiser, such as Auto Appraisal Network of Charlotte, that will fairly and accurately assess your vehicle’s pre-loss value and provide a certified appraisal report to you to give to the insurance company. This often results in people receiving thousands more than they were originally offered. 

Additionally, any portion of a Diminished Value or Prior to Loss claim that isn't covered by the insurance company may be tax-deductible on your itemized income taxes, including the cost of the appraisal itself.

Here are some things to keep in mind about diminished value claims in North Carolina:

Statute of limitations

The statute of limitations for diminished value claims is usually three years from the date of the accident. Meaning, you can file a diminished value claim up to 36 months after your accident, even if you’ve already received a check from the insurance company.

Claim process

To file a claim, you can send a letter to the insurance company with relevant paperwork and photographs. You should also state that the accident was caused by the negligence of the at-fault driver. 

Appraisal process

If you and the insurer are unable to agree on the difference in value, you may hire an independent appraiser, such as Auto Appraisal Network of Charlotte, who will come to you, assess the vehicle, gather information of comparable vehicles, and prepare a certified report that you will give to the insurance company. 

Appraisal clause

If the disputed amount of diminished value is more than $2,000, the appraisal clause can be invoked. 

Compensation

Even when repairs are done correctly, a vehicle that has been in an accident will always have a reduced value. This is because most consumers don't want to buy a car with an accident history.

By understanding your rights and addressing Diminished Value, you can be your own advocate and better navigate the aftermath of an accident. If you have been in an auto accident and were not at-fault, contact Auto Appraisal Network of Charlotte at (704) 703-4801 and schedule your diminished value appraisal today. We will help you get what is fair!