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What Is a Diminished Value Claim?
Everything You Need to Know

If you’ve been in a car accident, the value of your vehicle will be significantly lower. This is referred to as diminished value, which is the difference in your car’s market value before and after the accident.
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C.L. Mike Schmidt Published by C.L. Mike Schmidt

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3 Types of Diminished Value

There are 3 types of diminished value, each of which relates to the depreciation in the cost of your vehicle after an accident:

Inherent Diminished Value

Occurs when a vehicle loses value due to its history of damage, which is recorded in the car’s history report. Inherent diminished value, which is the most common and accepted form of auto accident diminished value, assumes that the car’s repairs were adequate and represents the amount the vehicle’s worth will decrease from the accident.

Immediate Diminished Value

This is the reduction in value caused by the accident before repairs have been made to the vehicle. When made, immediate diminished value claims demand more compensation than inherent diminished value claims. However, they are rare because insurance companies typically pay the cost of repairs.

Repair-Related Diminished Value

Refers to the loss of value due to the inability to perfectly repair a car. Repair-related diminished value means that the car is now worth less after repairs than it was before the accident.

How Do I Prove Diminished Value?

Your lawyer, with the help of an auto appraiser, can help determine the value of the car before the crash, and how much it would be worth after the accident and post-repairs. If you have a repair-related diminished value claim, you may be able to hire a mechanic who can determine exactly what the repairs were and how much it could diminish the value of the vehicle.

How to Calculate Diminished Value

If you’re looking for an easy way to calculate the diminished value, first determine the book value of your car. If damage from the accident is minor, figure 10% to 15% of the book value, and if the damage is moderate to severe, a figure roughly 15% to 25% of the book value.

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Is Diminished Value Negotiable?

If you are not happy with your insurer's payout offer following a car crash, contact your provider. Your insurance company may send an adjuster to handle the negotiations, or you may simply deal with them directly.

When negotiating with the insurance adjuster, make sure you understand what your auto insurance policy does and does not cover. Your insurer is not going to pay for damage that is not covered under your policy.

he declaration page of your auto insurance policy will provide a basic overview of your coverage, but you should also take the time to read through the entire policy to ensure you're only focusing on the damages your insurance covers.

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If you or a loved one was injured, you should contact our law firm immediately for a free case evaluation. You may be entitled to a settlement by filing a suit and we can help.