Diminished value occurs when a car is wrecked and repaired; naturally, a car that has seen even one accident has less market value than a car that has seen none. Although insurance companies may cover the cost of repairs, they usually won't offer to compensate you for the diminution in your vehicle's value. Negotiating compensation to offset diminished value will likely be an uphill battle, but the financial reward is worth the time and effort.
Act immediately. If you car is damaged by another driver, you have a chance of collecting compensation from the offending driver's insurance company to offset diminished value. Contact your insurance company and the other driver's insurance company directly after the accident. File your claim for repairs as you would normally.
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Have you car appraised after the damage is repaired. Knowing the exact current value of the vehicle will help you when making a diminished value claim. Compare the appraiser's price with the current value of the car according to a source such as the Kelley Blue Book or NADA Used Car Guide. Because of the repaired damage, your car's actual value will probably be significantly lower than the list price.
Get familiar with the policy language of the offender's insurance company. Every insurance company is different. Many insurers use an endorsement from the Insurance Services Office to exempt them from paying out diminished value claims. Insurance companies in Georgia, Hawaii, Kansas, Maryland and North Carolina as less likely to hold to this policy. Knowing the company's stance on diminished value will help you counter the adjuster's potential arguments.
Contact the insurance agent who sold you your policy. Relay your findings about your car's potential and actual value. Some agents, especially independent agents, will help you fight for a diminished value check. In the best case scenario, your agent will negotiate the compensation for you.
Decide on the amount you feel you're entitled to and write a letter requesting this amount to the adjuster in charge of your case at the offending driver's insurance company. Explain your car's current diminished value as compared to its book value and request the difference as compensation for the diminution. Clearly state that this diminution was not your fault, but the fault of the driver covered by the insurance company in question.
Follow your letter with a phone call to the adjuster. Restate your points orally. Make the adjuster justify her reasoning if she offers you a lower figure. Take notes on her points.
Write another letter that addresses each point and explains why you feel you're entitled to the full compensation for diminished value. Accent your argument with sparing emotional examples such as any medical problems you suffered as a result of the accident.
Follow up with another phone call. Propose a figure in between your original figure and the lower figure if the adjuster tries to talk you down again. In most cases, you'll meet in the middle.
Get in touch with your state insurance commissioner if the insurance company refuses to budge. Explain the situation to the commissioner's office and ask if they will contact the insurance company on your behalf.
Enlist the help of a diminished value claims authority. For a fee, these companies specialize in getting you your diminished value check. Once you hand the case over to a claims authority, they'll do the negotiating.
Take the offending driver's insurance company to small claims court as a last resort. You are entitled to the difference in value. Make sure you can prove the worth of your vehicle before the accident compared to the worth of you vehicle after the accident.
Take the initiative. An insurance company will not offer to pay the diminished value on your car; you have to pursue compensation.
For the most part, you won't be able to make a diminished value claim with your own insurance company or for an accident that was your own fault. Most states impose a statute of limitations on property damage claims, usually of about three years. Act within this time frame to negotiate a diminished value claim.
- ABC News Money; Been in a Car Wreck?...; Elisabeth Leamy; May 2010
- Insure.com; Diminished Value Car Insurance Claims...; Harry Hitzeman; August 2010
- Nolo: Negotiating With an Insurance Company
- Auto Loss: Diminished Value - The Biggest Secret in the Insurance Industry
- Bankrate.com; Car Wrecked? Diminished Value May Be Your Loss; Michael Giusti; December 2003
- Settlement Central; FAQ -- Diminished Value Insurance Claims ...; 2003