Buying a car is a big investment, though it loses value over time. Car value loss post-accident is another issue that may arise after you’ve been in a car accident.
Understanding vehicle depreciation after an accident is important to ensure that you get what is fair when a negligent driver causes major damage to your car. Tijerina Legal Group is committed to providing car accident victims with comprehensive legal services, including helping them understand vehicle depreciation after accidents and their right to potential legal recourse.
In this blog post, we discuss depreciation, diminished value claims, and how an experienced car accident attorney can help you.
Understanding Car Depreciation
Every car depreciates the moment it gets driven off the lot. However, a car can also depreciate after an accident. Depreciation refers to the value lost in an asset’s worth. Some things will appreciate, or grow in value, while others, like the car you drive to work every day, will depreciate.
Unless you have an antique vehicle that you work hard to take care of, your car depreciates over time. Post-accident depreciation can cause its value to drop, leading to a significant depreciation of this asset.
Factors Affecting Vehicle Depreciation After a Car Accident
How much does a car depreciate after a car accident? The answer depends on several factors that can greatly impact its value after an accident.
Severity of the Damage
The first factor pertains to your damaged vehicle in terms of severity. If it has significant external or structural damage, it is going to have a greater diminished value after a car accident.
Vehicle Age and Car’s Pre-Accident Condition
The older your vehicle is and the more miles it has on the odometer, the greater the diminished value it will have after a car accident.
Make and Model
Investing in a luxury vehicle is a bigger risk. The diminished value will be greater compared to less expensive vehicles.
Current Market Value of Your Vehicle
How much value will your car lose? It will depend on the current market value for your vehicle.
These are just several factors of many that contribute to depreciation after a car accident. The greater the damage, particularly if it’s structural, the less your vehicle will be worth.
What Is a Diminished Value Claim?
A diminished value claim occurs when a car is worth less after an accident than it was before. The diminished value after a collision is more common for vehicles that are fairly new.
Essentially, diminished value claims mean that consumers won’t pay as much for a damaged vehicle as they would for the same vehicle without any car accident damage. If you’ve ever shopped for a used vehicle, then you may have seen this in action with two similar makes and models on the lot. If they are virtually the same except in price, it may be due to the diminished value after a car accident.
What can you do if your vehicle has diminished in value? You can file a diminished value claim, which allows you to get the diminished value insurance companies often try to prevent you from claiming.
Types of Diminished Value
There are several types of diminished value claims to know:
Inherent Diminished Value
Inherent diminished value is the most common type of diminished value claim. It refers to the loss of value for a vehicle due to its involvement in a car accident, even if it has been fully repaired. This is often what you will find when shopping for used vehicles.
Immediate Diminished Value
Immediate diminished value refers to the value of your vehicle before having it repaired. This is the value that is used in court but it is not what insurance companies use to calculate the value.
Repair-Related Diminished Value
Value loss can also be caused by the quality of the vehicle repair. It pertains to whether the mechanic was able to properly repair your vehicle or had to use aftermarket parts.
How Much Value Does a Car Lose When It Has an Accident History?
After car accidents, vehicles will not have the same pre-accident value. How much does a car depreciate? It will depend on the extent of the damage, which can be an issue for its safety rating or even lead to mechanical problems.
If your vehicle’s accident history includes just a minor fender bender that only required having a dent popped out, it may only have a diminished value of $500. However, if your car’s accident history contains a severe crash, it is likely to be thousands of dollars in diminished value.
When a vehicle has been in a car crash, it tends to lose 10% to 30% of its value compared to its pre-accident condition. More severe damage would likely cause it to have a diminished value of 50% or more. Since you may not know if your insurance policy covers these types of claims or if insurers will try to reduce their payout, it is wise to consult a car accident attorney who can give you legal advice specific to your circumstances.
How to Get Diminished Value Claims from the Insurance Company
When you’ve been in a car accident, understanding how to make a diminished value claim with the insurance company is something you should know. Making this claim can help you get what’s fair from your insurance company or sell your vehicle.
The first thing you should always do following a serious accident is to seek medical care and then contact a car accident lawyer. After that, you should prioritize your diminished value claim by looking at the market value and mileage of your vehicle to help you determine its worth.
Before you file a vehicle depreciation claim, you should take the following steps:
Find the Blue Book Value of Your Car
You must know the Kelley Blue Book value of your vehicle, which is how much it is worth before the crash. Before you find your car’s resale value prior to any car accidents, you will need to find the vehicle identification number (VIN) but you can also get this estimate based on the make and model or by using your license plate.
Calculate the Market Cap Value
In 2001, a Georgia court case established the way to file a diminished value claim through the market demand or value via the 17c formula. It set the standard for how this number is now determined. You can calculate the diminished value by taking the number you got from the Kelley Blue Book value and multiplying it by 10%. If your car was worth $30,000 before the wreck, you’d multiply that by 10%, which equals $3,000.
Apply the Damage Multiplier
Now that you have determined that number, you must then multiply it by the damage multiplier. Insurance companies use these as the standard when filing a diminished value claim for car accident cases.
Before your insurance company does this, you can find it yourself. The multipliers range from 0.00 to 1.00. Typically, 1.00 is used for severe structural damage while 0.50 would be moderate damage to the structural integrity and panels. With a multiplier of 0.00, it would indicate no structural damage or the need for replaced panels. If your vehicle had a $3,000 market cap and 0.50 as the multiplier, it would be $1,500.
Calculate with Mileage Multiplier
The final step in calculating the diminished value to get fair compensation from the at-fault driver is using the multiplier for mileage. You will need to know your vehicle’s mileage at the time of the accident. Vehicles that have 19,999 miles or less will have a multiplier of 1.00 while vehicles with 100,000 or more miles will have a multiplier of 0.00.
Using the example from above, if your vehicle had 30,000 miles on it at the time of your auto accident, that would mean a multiplier of 0.80, so $1,500 x 0.80 = $1,200. This would then be what you’d seek from the insurance policy of the other driver who caused the crash.
When you have this type of claim, you can file it through the insurance coverage of the other driver to cover the cost of repairs. In order to do so, insurance companies expect you to have the vehicle repaired first, then have it appraised. You can then deduct the value after repairs from the value prior to getting into the accident.
How to Know If You Should File a Diminished Value Claim
When you’re in this type of situation, it’s already stressful, especially if you have injuries. You can benefit from discussing your circumstances with a car accident lawyer who can help you through the legal process.
Before filing this type of claim, it is important that you take the steps mentioned above to calculate what your car is now worth. Even with the lost value, it may still have substantial worth.
Additionally, Texas is a state that uses modified comparative negligence in car accidents. If you were less than 51% at fault, you can still seek compensation. However, if you had more fault than that, you will be barred from filing a claim.
When you have a luxury vehicle or a newer, well-kept car, it doesn’t seem fair that you should lose money you deserve. If another driver caused the auto wreck, they should be held accountable. Insurance companies commonly try to minimize the payout to victims or blame them to prevent them from getting any compensation.
If you have recently been in a car crash, you should not waste any more time trying to navigate the complexities of your case. A car accident lawyer with Tijerina Legal Group can help you from the start of your case.
Painful injuries can impact the way you live your life in the short and long term. You may be unable to go to work and you could endure mental anguish and other effects that a negligent driver caused. Beyond reimbursing the value of your vehicle, you can seek the full amount of your damages and start putting your life back together.
After a traumatic event, it can be difficult to know where to start when dealing with everything. A car accident attorney ensures you have someone who knows about the laws, insurance claims, and more advocating for what is fair to you. You can schedule a free initial consultation with us to learn more about your legal options and determine your car’s value after an accident.
