What happens when your car gets damaged in an accident, but not totaled? It’s called diminution of value.
When you are in a car accident, your first thought is safety. Was anyone hurt? After that moment, when hopefully you learn that everyone is fine, your next thought is, “My car!”
Even if no one was hurt, if your vehicle was damaged in an accident that wasn’t your fault, you are likely going to face several days of conversations with insurance companies and auto body shops. Then you’re going to face weeks without your car while it is repaired. (See below for things you might consider adding to your car insurance policy to make this waiting period less stressful.)
Now, the other driver’s insurance company might pay for the repairs of your car and, often, people think that is enough. But you will be facing another loss down the road that you need to consider immediately: when you go to sell your car later, you won’t be able to get full NADA or Kelly Blue Book value for it because of the accident, which wasn’t even your fault. That represents another loss that the other driver’s insurance company should cover.
You will be facing another loss down the road that you need to consider immediately: when you go to sell your car later, you won’t be able to get full value.
What is Diminution of Value?
The confusing legal term for this is “diminution of value.” Essentially, the value of your car has been diminished, even after the repairs.
Here’s an illustration of what this means:
Let’s say you are the proud owner of a Ford Explorer and you get hit by someone else, causing $15,000 worth of damage. The car is not totaled, but, obviously, has sustained significant damage. Everyone knows that they should look to the negligent driver’s insurance to pay for that $15,000 repair.
But, when you go to sell that Explorer and the next buyer sees from the Carfax report that it was in an accident that caused $15,000 worth of damage, the buyer won’t be willing to pay full Blue Book value for your car. That is a financial loss for you.
Therefore, you can require the negligent driver’s insurance company to pay you for this loss. In essence, you’re making a “diminution of value claim.” The value of your car was diminished by the accident, even after all of the repairs were made.
Now, of course, insurance companies won’t make this easy on you. The insurance company might offer you $2,000 in the diminished value claim, but a good Colorado personal injury attorney could document additional losses and argue that your car lost $6,500 in value. (Truth be told, this example is from a case that we’re handling right now and we are countering the insurance company’s offer for exactly this amount.) That’s an extra $4,500 in your pocket!
How Do I Determine the Diminished Value of My Car After an Accident?
Determining the diminished value of your car after an accident is a science. You can’t just look at the Kelly Blue Book value, subtract the cost of your repairs, and determine the remaining value of your car. There are often formulas that auto experts use in determining the value. And you need that estimate certified by a reputable shop in order to get the proper value from an insurance company’s diminished value claim.
There are companies out there now that help you to determine the loss of value on your car after an accident and we have a relationship with one that has agreed to offer our Colorado clients a fee reduction when we refer them. Call us and we’ll share the company’s name.
What Kind of Car Rental Insurance Should I Get?
Now, let me return to the days and weeks after an accident and discuss the stress of losing your car to an auto body shop for repairs. I have a friend whose teenage daughter recently drove their car into a tree. Luckily, nobody was hurt (unless you count the tree), but the car needed significant repairs.
The family wanted to avoid paying for a rental, so they borrowed a car from relatives, thinking the repairs might take a week to 10 days. Two weeks passed and the car was still in the shop. Three weeks. Finally, four weeks later, the car was fixed and the family was able to return the car they borrowed from relatives. But in that time, things got tense, because the family was so worried about keeping the borrowed car for so long. Still, they were lucky to have it available.
Check your insurance card or call your insurance agent to find out if you have rental car coverage.
For people whose cars are in the shop for days or weeks and who don’t have relatives with a car to loan, a rental is often the only way to continue working and taking care of all of life’s daily tasks. If you have a car rental included on your insurance policy, you can usually get some wheels for just dollars a day, even if the accident was your fault. It’s called “rental reimbursement coverage” and you usually have two options on how to access it:
- Rent a car from an approved provider who can bill your insurance company directly.
- Rent a car from a company of your choice, pay the cost up front, and then submit receipts to your insurance company for reimbursement.
Usually, there is a per-day or a per-accident limit on how much you will be reimbursed for a car rental after an accident. You should check your insurance card or call your insurance agent to find out if you have rental car coverage after a car accident. It’s usually inexpensive to add to your policy and it could relieve you of some stress while your car is in the shop.
If you have been in an accident, hopefully you’re not hurt! Next, think about your car and how you can get all of the repairs covered, including payment for its lost value. Why should you lose a single dime due to someone else’s negligence?
Have questions about this article? Give me a call at (303) 388-5304.
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