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After a car accident and the body work is done, you are back to “normal” right?  After all, the car looks and drives just like it did before the accident, right? Well, not exactly. The fact of the matter is that your car is now worth less than before the accident because it is now is a “repaired vehicle” and this information is now part of the permanent history of your car. Here’s what you should know.

Diminished Value 
Diminished value is defined as the loss in value of a car following a car accident due to the fact it was in an accident. What this means is that if your car is damaged in a car accident, even if it gets repaired and seems “as good as new”, the fact that the vehicle now has damage history. And, as Rochester Hills Chrysler (Rochester Hills, MI) explains: this will make its resale value lower in the eyes of prospective buyers.

Example of Diminished Value After a Car Accident
Let’s say you have a brand new car and after an accident, your insurance company fixes your car back to its original condition. Then, sometime in the future, you go to sell your car and since the new buyer checks out the car’s history report and finds out that it was in an accident, they are not willing to pay what your feel your car is actually worth. In a worst-case scenario, some buyers won’t even consider buying your car at all since it was in an accident!

What Is a Diminished Value Insurance Claim?
A Diminished Value Insurance Claim is when you request an amount of money from your car insurance company to compensate you for the difference between your car’s value prior to the accident and its current value now that it has been repaired. This value can easily amount to several thousand dollars for newer vehicles.

Will the Insurance Company Pay for Diminished Value in My Claim?
You may be able to get compensated for the diminished value following a claim, depending on the circumstances, and the state you are living in. Each state has different policies. In general, Insurance companies don’t usually want to pay for a vehicle’s diminished value. Insurance companies in most states will consider who is responsible for the accident to decide if they will pay a diminished value. In other states, they may not pay at all.

Diminished Value Claims and Uninsured Motorists
If your accident is the fault of an uninsured motorist, ask your insurance company about a diminished value claim; many states will allow diminished value claims to be paid from the uninsured motorist portion of the insurance.

If You Are Responsible
Responsible accidents are accidents that you have “caused.” You may have a harder time trying to collect anything from your insurance company if the claim is considered due to a responsible accident. If you have legal insurance or access to inexpensive legal counsel, then you could consult your lawyer to find out what the likelihood of getting paid would be based on your state laws.

How to Estimate the Diminished Value After an Accident
The easiest way to get a quick idea is to use an online site like Edmunds or Kelley Blue Book to find out what the value of your car would “pre-accident.” Then you can ask your car dealership to give you a trade-in value on your vehicle now that you’ve had an accident. This should give you a ballpark idea of the diminished value. 

Alternatively, the second way to verify diminished value is to get a professional evaluation from a company that specializes in diminished value insurance valuations. This will be the most reliable source if you want a solid number, just make sure that your evaluator is qualified and recognized by insurers.

What States Will Pay Diminished Value Claims?
Some states agree that insurance companies are required to pay the diminished value, so if you are in one of these states, you shouldn’t have a problem.  If you want to know if your state generally covers diminished value claims, you can contact your state insurance commissioner

If Your Insurance Will Not Pay Diminished Value After Your Car Accident
If you are trying to collect on a diminished value claim and are denied by your insurance company, go to your state insurance commissioner first. If you get no help there and if it is important enough to you, you could hire a lawyer to help you recover the diminished value of your vehicle.