Is My Car Worth Less After an Accident?

Yes, your car is worth less after an accident even if it runs perfectly and looks brand new. That’s because when it’s time to sell your car, you must disclose that it was involved in an accident, and buyers will expect a discount. Most insurance companies use a formula to determine what to offer claimants for their property damage claims that doesn’t adequately take diminished value into consideration.

That’s why the best Los Angeles personal injury attorneys go after the responsible parties for compensation for the true diminished value of your vehicle, helping you more thoroughly recoup your loss. Block LLP is the Los Angeles personal injury and property damage attorney that always goes the extra mile to help clients collect what they deserve. Call 818-740-5335 for a free consultation.

What is a Diminished Value Claim?

Diminished value is the difference between the value of a vehicle with the same make, model and production year that did not sustain a crash and one that did. For example, if your car would be worth $10,000 with no accidents, it could be worth $9,000, $8,000 or even less depending on the type of damage it sustained in a crash. A diminished value claim pays out the difference between these two sums to compensate you for the reduced price you are likely to receive when the time comes to sell your car.

Types of Diminished Value Claims

The most straightforward type of diminished value claim is inherent diminishment from a crash on your car history report. Basic diminishment assumes that the repairs to the car were of optimal quality and the car was restored to perfect running order after the crash. Repair-related diminished value can further reduce the value of your vehicle after an accident. For example, if the parts used were aftermarket instead of from the original equipment manufacturers (OEM,) or the paint color is not exactly the same as the original, this can further reduce the value of your vehicle. Immediate diminished value applies if you try to sell your car before it is repaired, but since most insurance companies repair cars so quickly, this claim is rarely relevant.

How Insurance Companies Calculate Diminished Value

The standard method for calculating the value of a vehicle after an accident is to use the “17c Diminished Value” formula. This formula is named for a Georgia class action lawsuit (Mabry v. State Farm) where the court approved its use because it was an easy way to calculate the diminished value of a large number of vehicles in a uniform manner. Most insurance companies use this formula because it has a court’s stamp of approval and produces a lowball value for the car. This is how the formula is employed:

1.   Determine the vehicle’s book value: This is accomplished by using Kelly Blue Book, NADA or other websites designed for this purpose. The websites allow you to enter information such as the make, model year, mileage and damage to a vehicle and calculate a price for your car.

2.   Reduce the Amount by 10%: The next step is to apply a 10% reduction to the book value. This reduction is called the base loss of value for vehicles with a crash history.

3.   Apply Damage Multipliers: These multipliers further reduce your diminished value claim based on the amount of damage it sustained before the accident. If there is no structural damage to the vehicle, no multiplier is applied. If there is structural damage, the following multipliers are applied, minor damage .25, moderate damage .50, major damage .50 and severe damage 1.0. The decision about which multipliers apply to your vehicle are based on the location and extent of the damage to your vehicle. It’s designed to appear scientific, but it’s actually rather subjective.

4.   Apply Mileage Multipliers: Even though the blue book value of your car already takes your car’s mileage into account, part of the 17c process is to further reduce the value with mileage multipliers. This is how the multiplier is applied:

○     1.00 - 0-19,000 miles

○       .80 - 20,000 - 29,999

○      .60 - 40,000 - 59,000

○      .40 - 60,000 - 79,000

○      .20 - 80,000 - 99,000

○      .00 - 100,000

The term modifier is insurance company jargon for a reduction, and each of these modifiers chips away at your claim for diminished value. You have a right to challenge your insurance company’s valuation, and you’re more likely to be successful if you hire an attorney to handle your claim.

How To Improve What You Collect for Diminished Value

The blue book value and application of the 17c formula for diminished value is a simplified approximation of your car’s value based on facts that are entered into the system. The valuation can be contested with evidence from a certified appraiser that sets the value higher, but the valuation won’t be taken seriously unless it’s done by an expert with a good reputation. The best Los Angeles property damage attorneys have networks of experts at their disposal to assist with your claim. 

Roadblocks for Diminished Value Claims

If your car is very old and has sustained a great deal of damage during its lifetime, its value is going to be so low that you will not be able to collect anything for diminished value. If you caused the accident, you will only be able to negotiate the payout from your collision company because there is no third party to sue for damages. Uninsured motorist claims rarely cover property damage, so you would also be limited to negotiating with your own collision carrier.

Los Angeles Diminished Value Claims Attorney

If you’re not happy with what your insurance company is offering you to settle your property damage claim, you have a right to refuse to accept it. It’s no secret that self-represented plaintiffs collect substantially less than claimants with attorneys, even when you factor in attorney’s fees. That’s why it’s important to consult with an experienced Los Angeles property damage attorney to find out if you’re leaving money on the table for your diminished value claim. Block LLP is the personal injury and property damage attorney that’s trusted by more people in Los Angeles than any other firm. Call 818-740-5353 for a free consultation.