November 11, 2009

What Is Diminished Value?

After a car has been damaged in an auto accident, it has less value. If you try to sell the vehicle after it has been damaged and repaired, you will receive less money for it. This is also referred to as your vehicle’s diminished value. Research shows that people who buy cars that were involved in an auto accident expect to pay less money for them. In addition, the cost for auto insurance coverage usually increases with previously damaged vehicles. Furthermore, people automatically assume that the car is not in perfect condition anymore, and it might cost them money down the road with repairs. Another concern is the parts used to repair the vehicle after the accident. Sometimes, repair shops do not use parts from the manufacturer, so people assume that the car will not function as well, or it will need to be repaired again in the near future. As a result, the seller risks losing money when someone buys the vehicle. Keep in mind that the seller is obligated to tell the buyer about the car’s history. It is illegal to withhold that information when selling a car.

There are many different factors that play a role when deciding how much a vehicle is worth after being involved in a car accident. This includes the age of the car, the total number of accidents, the vehicle’s condition before the auto accident and mileage. The extent of the car’s damage also affects the value. An expert would be necessary to assess the car’s value after the automobile accident.

Please note that you may be able to collect payment for the car’s diminished value. For example, if someone hits your car, you would file a third party auto insurance claim with that person’s auto insurance company. You can request payment for your vehicle’s diminished value. You can check with his auto insurance provider, because the laws vary in each state. Sometimes, it is difficult to receive payment for the car’s diminished value. Some auto insurance companies have stated that they might have to increase auto insurance premiums to make up for the loss of diminished value claims.

If you have been involved in a car accident and you are interested in filing an auto insurance claim, you can contact a lawyer that has experience with diminished value claims. He will advise you on what you can do. However, in most states you will be able to file a claim with the third party auto insurance provider. Keep in mind that you should file the diminished value claim after the car has been repaired, with the payment you received from the auto insurance provider.