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Diminished Value: The Best Secret in the Auto Insurance Industry
Do you want to know a secret? You may be able to claim for you car’s diminished value if you have been in an accident.
What is diminished value? Diminished value is the amount your car lost in value automatically as the result of an accident.
Accident Risks
The best way to avoid damage on your car is to avoid having an accident. This means that you should be driving responsibly.
There are several factors that can increase your relative risk of having an accident. For instance, the faster you travel in a 35 mph speed zone, the more likely you are to have an accident.
If you are driving 35 mph in a 35 mph, your relative risk of having an accident is almost 0. However, at 80 miles per hour, you have a 35% relative risk of having an accident.
This is also true of driving after drinking. If your alcohol level is below 0.125 g/dl, your relative risk is low. Increase that to 0.2 and you have a 35% relative risk of having an accident.
How Accidents Can Affect Your Car’s Value
The damage inflicted on a car can affect its resale value.
For example, let’s say your car was worth $30,000. Some one hit you and caused $5,000 worth of damage. Fortunately, your car’s repair was paid for the insurance company.
You then try and get $30,000 for the car when you sell it. Once the buyer finds out it has been in an accident, he may be only willing to buy it for $22,000.
In this case, the diminished value of your car is $8,000.
Cars People Won’t Purchase
Why does an accident affect your resale value when your car looks as good as new? An accident makes your car less desirable for a consumer to purchase.
Over 70% of repaired vehicles lose market value. And repairs don’t always mean safety. More than 42% of all repaired cars are still too unsafe to be on the road.
In fact, sometimes frame or structural damage may prevent your car from being resold as a certified used car. What does that mean for you?
It can impact the value of the car up to 40%!
The fact is that 55% of consumers won’t purchase a car that has been in an accident. 81% wouldn’t buy a car that has been in an accident unless they were offered a discount.
Without frame damage only 19% would not purchase a car with over $2,000 of damage. Add in frame damage and the number jumps to 60% of individuals who would not purchase a car with over $2,000 of damage.
How to Deal with Your Insurance Company
In an average diminished value claim, the amount of pre-loss value for the car is $20,565.42 and the damage invoiced is $10,109.74.
The average diminished value amounts to $6,486.54–an average of 32.9%. This is money you can claim.
Even if you have already settled the cost of the damage with your insurance company, you can still claim for diminished value as long as the repair recently happened. Either your insurance or the other car’s insurance can be pursued, depending on the situation.
So how do you handle the insurance company?
1. Document everything. Make sure you have your police report, the other driver’s insurance, pictures of your damage, pictures of the other car’s damage… anything and everything you might need should to be documented.
2. Do all your correspondence in writing. That way you can go back and see exactly what was said by all parties.
3. Do not debate the insurance company.
4. File complaints if you feel you have been wronged. That is what the complaints department is there for.
5. Involve your local media.
6. Don’t give up. Persevere and you may come out on top.
If you have been in an accident, you may not have to eat the cost of the diminished value of your car. Find out if your insurance company will cover it. You may be in on one of the best kept insurance secrets around.
