Diminished Value
Understanding Diminished Value: The Insurance Detail Often Overlooked
If you’ve been in a car accident in the last 3 years in North Carolina and were not the at-fault driver, you may still be owed compensation from the insurance company. If the insurance company did not factor in the diminished value of your car, or they did factor it in but low balled the amount, keep reading.
What is Diminished Value?
The Diminished Value of a car refers to the reduction in a vehicle's market value following an accident. This depreciation stems from the perception that a vehicle, once damaged, can never hold the same value as it would have if it remained undamaged.
What you may not know, and what the insurance company doesn’t always tell you, is that you’re owed this amount after a car wreck. This amount is often thousands of dollars! In cases of diminished value claims, you have got to be your own advocate. Hiring an independent, professional appraiser, that is, an appraiser that does not work for the insurance company, to assess the diminished value is in your best interest, and may even be required to prove what your vehicle was worth before the accident.
How Diminished Value is Calculated
- Establish the value of your vehicle pre-accident
- Apply the 17c formula to determine the vehicles market value 10% cap
- Apply a damage multiplier (see chart below)
|
Level of Damage |
Multiplier |
|
No damage to panels or structure |
0.00 |
|
Minor damage to panels and structure |
0.25 |
|
Moderate damage to panels and structure |
.50 |
|
Major damage to panels and structure |
.75 |
|
Severe damage to structure |
1.00 |
Example:
Pre-accident car value: $45,000 x 10% market value cap = $4500
Determine the level of damage the vehicle has using the above chart. Multiply $4500 by the multiplier. In this example, we’ll say that the vehicle had moderate damage. $4500 x .50 = $2250
Now, apply a mileage multiplier
|
Mileage |
Multiplier |
|
100,000 and higher |
0 |
|
80,000-99,999 |
.20 |
|
60,000-79,999 |
.40 |
|
40,000-59,999 |
.60 |
|
20,000-39,999 |
.80 |
|
0-19,999 |
1.00 |
In this example, our vehicle had 30,000 miles on it at the time of the accident, so we’ll use a multiplier of .80.
$2250 x .80 = $1800
Using this formula, the vehicle’s diminished value is $1800. Meaning, even if the car is fully repaired to its pre-accident condition, its market value is still $1800 less than it would have been, had it not been in an accident. You should be compensated this amount by the insurance company.
Unfortunately, the amount of diminished value the insurance company calculates is often vastly different from the amount you determine using the formula above. This is the point when you should call Auto Appraisal Network- Charlotte.
As independent appraisers, we work for you, not the insurance company, and can provide an unbiased opinion about the value of your car. Utilizing our expertise, knowledge, experience and extensive database of vehicle’s, we can accurately determine the value of your car before the wreck. We document all of your vehicle's information, including mileage, upgrades, customizations, and modifications that Kelly Blue Book doesn’t account for, and put it together in a certified appraisal report for you to present to the insurance company.
Auto Appraisal Network has help people just like you recover hundreds of thousands of dollars from the insurance companies after a car wreck. In North Carolina, you have 3 years after the date of the accident to file a claim.
If you think you are owed more than the insurance company is offering to pay, and you are not the at-fault driver, contact Auto Appraisal Network- Charlotte today. In most cases, we’ll be able to tell you over the phone if its worth your time and money to get an appraisal done to pursue a diminished value insurance claim. If we think it’s worth your time, we will come to you to complete the appraisal, often the same day or day following your call.
Should any part of your diminished value or Prior to Loss claim remain unsettled by the insurer, you might be able to deduct this unrecovered amount on your income taxes, appraisal fee included.
For tax purposes, utilize IRS Form 4684 to detail Diminished Value and related appraisal expenses.
PROTECT YOUR INVESTMENT.
HAVE IT PROFESSIONALLY APPRAISED
