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How to make a diminished value claim

There are a few types of diminished value and many people are curious about why their car is worth a lot less after a car crash occurs. It is not a surprise to most that a vehicle is worth less after it is in an automobile accident. There are questions that often come about how diminished value is calculated, however. Other people are surprised to hear that even after repairs have been done on an automobile, it is still worth less than it was before the crash.

Why would a vehicle have a loss, even if it is repaired and is considered as good as new? One of the reasons is that the car now has a damage history. This means that whenever the car gets sold to another person, they will be able to look at the vehicle history report and see that it has been in an automobile accident. This, in turn, makes the resale value of a car less. When the resale value is less overall, the overall value of the car is also lower.

What Is Diminished Value?

 

The diminished value, often referred to as the diminution of value, is the difference in value for a vehicle before it was in an accident, and after. This is not the same as depreciation, which is the decreasing value of the vehicle over time. Regardless of whether the car has been repaired by the best automotive shop in the neighborhood, and with the manufacturer's parts, the value of the vehicle decreases even after the repairs are made.

People are less inclined to buy a vehicle that has been in an accident. Even though the repairs on the vehicle have been made, the accident still appears in the vehicles history report. This lowers the cost of what potential buyers will pay for the car. There are multiple types of diminished value, and the formulas that are used to determine the diminished value of the car include multipliers.

Some automobile insurance companies will have slightly different modifiers that they use in their formulas. By using these formulas, you can get an idea of the value of your vehicle after it has been in a car crash. Keep in mind that people can generally not claim diminished value against their own collision insurance coverage. There are a few states that allow this to occur, but many do not. Whether you are in an accident, or looking to use your comprehensive insurance coverage, you will likely not be able to file for diminished value against your own vehicle.

 

Types Of Diminished Value

 

The three types of diminished values that can be considered if an accident occurs include Immediate Diminished Value, Inherent Diminished Value, and Repair Related Diminished Value. Any of these three things may make you take a look at filing a claim. Each of these types of diminished values applies in different ways and have different definitions.

Immediate Diminished Value is the difference between the resale value, or trade-in value, of a vehicle before an accident and then after the crash after repairs on the car have been made. This is often one of the easiest types of diminished value calculations to do, making it a standard benchmark.

Inherent Diminished Value assumes that a vehicle has been repaired to its original condition after a car crash occurs. Even though the repairs may bring it to its original condition, it is still a vehicle that has been through a car crash. The perception surrounding cars that have been in automobile accidents reduce the price a person can get for the vehicle if they want to sell it or trade it in. The amount that they would have gotten before the accident in comparison to the value they will receive after an accident occurs is the Inherent Diminished Value of the vehicle.

The last type of diminished value is Repair Related Diminished Value. This is the decrease in value from a vehicle being in an automobile accident; it relates to the lost value due to the quality of repairs made on the vehicle. If, for example, the driver side mirror that is put on the vehicle after an accident is not a match to the one on the passenger side, the vehicle may have less value overall. This value can also be used when generic parts are used in place of the original manufacturer's parts during the repairs, or if the people doing repairs could not successfully match the paint colors on the vehicle.

There are formulas that are used to determine the diminished value of the vehicle after an accident, and even when attempting to sell the vehicle at the diminished value rate, some people choose not to purchase it. Many people are hesitant to buy a vehicle that has been in an automobile accident. If your vehicle has been in an automobile accident and you might look to sell it, make sure to keep all records of repairs that have been made on it. Also, keep in mind that diminished value can affect your vehicle after a claim is filed.

 

What Is A Diminished Value Insurance Claim?

 

A diminished value insurance claim is when the insurance policyholder requests money from an auto insurance provider to compensate them for the difference in value before repairs were made on the vehicle and after a car crash and repairs occur. The amount can be up to a few thousand dollars or more if the car is newer. Older vehicles tend to decrease in value less, as they are generally worth less to begin with.

 

Diminished Value Calculation

 

Calculated by both private buyers and dealerships when looking at what amount is acceptable to pay when purchasing a used car, diminished value calculations are massively important. If a buyer is interested in a car, as an example, a seller may just the price based on things in the vehicles history report. If a car, truck, van, or other vehicle has been in an accident, or multiple accidents, the information is readily available to the buyer. This means that with a little bit of research, they will know. Fortunately, car dealerships also know and adjust their pricing accordingly. Even though the prices have been adjusted in most cases, as someone who is looking to purchase a vehicle, you should research vehicle values. Research the diminished value of the vehicle you are considering.

In order to determine the diminished value of the vehicle you are looking at buying, you will need to utilize a diminished value calculation. There are different ways to calculate the diminished value, which will be explained here. Not only do buyers and sellers utilize diminished value calculations, but insurance companies also use diminished value to respond to claims that are made.

When purchasing a vehicle, it is recommended for buyers to calculate the diminished value of the vehicle objectively. By being able to offer a value for the car that they believe is fair and accurate, after taking the vehicle history report into consideration, they are more likely to get a good deal on the car. Remember that the number a buyer will offer for a vehicle that has been in an accident tends to be lower than the price of the vehicle offered if it has not been in an accident.

Each auto insurance company, when they are in a contract, use a formula; the specific formula for calculating diminished value. This formula is known as 17c and is used by many automobile insurance providers in the US. This calculation limits loss to a percentage that is arbitrary, and one that most often favors the insurance company.

Another consideration is that each state has different laws in terms of diminished value. It is common for there to be limitations in relation to filing a diminished value claim on a car. Once you know how to file a claim, following your state's laws, you will need to calculate the diminished value.

To determine an actual diminished value for your vehicle, you will need to know the actual value of your car. There are a few different websites that people can use to determine this value. Use the tools on this site for more information. Some people also check out websites and dealerships to find cars that are the most similar in year and mileage as their own, and with the same options. Do the search by ignoring vehicles that have been in accidents, as their values will be lower. Make a note of ‘accident car’ website links though, so you can use them later to compare your results. Keep in mind that vehicles can be worth different amounts based on where you live as well, due to supply and demand, as well as how natural wear and tear affects the vehicles.

Next, remember that many professionals estimate the value lost to a vehicle that has been in an accident to be around 33%. This is a good starting place to determine diminished value. Look at the relative prices of vehicles you have found in your search that have been in an accident. Check and see if it is similar to the estimate put forth by the 33% loss that professionals use. To see if this estimate holds true, you can subtract the market value of the vehicles that have been in an accident with the market value of the vehicles that have not. This research will give you a good idea of the diminished value, as well as the actual value of the vehicle after it has been in a car crash.

 

Will The Auto Insurance Provider Pay For Diminished Value?

 

It is possible to be compensated for the diminished value of your vehicle following an automobile insurance claim. Each state has different rules and requirements for diminished value claims, with some states not allowing them at all. If the state you are in allows diminished value claims, your next step is to contact your auto insurance provider to determine what their procedure is on this type of claim. For people that have a newer vehicle, more expensive vehicle, or have been in an accident that had expensive damages repaired, looking into making a claim for diminished value can be very beneficial.

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