What Is Diminished Value? 

What Is Diminished Value? 

What is diminished Value? Diminished value refers to your vehicle’s value after it’s been in an accident. When people buy cars, they generally have an overwhelming preference for vehicles that haven’t been in an accident. Generally, minor collisions are less detrimental to the car’s value than severe crashes.  However, an accident, regardless of the severity of the collision, will likely have a negative impact on your car’s value. If you were in a car crash, and you were not at fault for the car crash, your vehicle may have decreased in value due to the negligence of another person, even after the repairs are complete. If that is the case, you may be able to file a claim for the decrease in value of your vehicle. These claims are called diminished value claims, and the goal of these claims is to compensate accident victims for the loss of value to their vehicle. This claim is separate from your bodily injury claim, and many attorneys will not assist you with your property damage/diminished value claim because this is not something that attorneys can usually make money on. 

Make You “Whole” 

The goal of a settlement is to make you “whole.” To be made “whole” means that you are as if the accident never happened in the first place. Unfortunately, it is impossible to truly be made whole after an accident. This is especially true if you’ve sustained life-altering injuries. However, the goal is to get you as close to “whole” as possible. Part of being whole may mean receiving compensation for the loss of value in your vehicle since it’s been in an accident. For example, even after all the repairs are done and your car looks and drives like it did before the car crash, its value will still likely be lower due to the fact that the car has been involved in a collision. It’s not fair that the accident victim’s car will eventually be sold for less due to the negligence of another person. Therefore, part of making the accident victim “whole” is compensating them for the diminished value. 

Diminished Value Claims vs Gap Insurance 

A lot of people confuse diminished value claims with gap insurance. While the two may appear to be similar, they are two different things. A lot of people are “upside down” on their car when the car is first purchased—especially if the car is new. Being upside down means that you owe more than the car is worth. This typically happens because the car depreciates when it’s no longer able to be considered “new.” If someone else’s negligence caused your new car to be totaled, you’d get a check for the value of the car—which could be less than what your remaining loan balance is. For example, if you finance a brand-new car for $10,000, but the car is only worth $8,500 at the time of the wreck, the insurance company will only offer you $8,500 to cover the cost of the car. This would be a problem as you’d still owe the bank $1,500. However, if you have gap insurance, your gap insurance will cover the remaining $1,500 that’s left on the loan. A diminished value claim is not a substitute for gap insurance. Diminished value compensates the driver for the depreciation in the car’s value due to having been involved an accident. If someone else’s negligence totals your brand-new car, and it’s not a total loss, your vehicle will get repaired. However, a car that has been repaired after an accidence is always going to be less than a car that was never in an accident, that difference is the diminished value.  This is not something that would be covered by gap insurance and is a damage you’ve incurred as a result of the collision.  

Do Your Research 

Not every attorney will be willing to help you with pursuing a diminished value claim. Most of the time you have to sue the other driver in small claims court to pursue your claim for diminished value. Some states have laws that if you settle, you’re bodily injury claim, you’re also settling your property damage claim, make sure you know the laws of your state, and you’re not settling both cases if you don’t intend to.  Some states allow you to “bifurcate” or separate your bodily injury claim from your property damage claim. Meaning, even if you settle your bodily injury claim, you can still pursue your property damage claim. Generally, appraising a vehicle after an accident isn’t free and could cost you money out of pocket. You may need to hire an expert to value your vehicle. Because of this, you may want to get a personal injury attorney’s opinion before paying for an appraisal. Meeting with a personal injury attorney for a free consultation can help you make informed decisions on your claim without having to take a financial risk to determine whether you have a claim in the first place.