What is the Diminished Value of a Car After an Accident?
Diminished value of a car after an accident refers to its loss of market value. In a market economy, supply and demand determine the value of any product. A car, or any other consumer good, is worth what a buyer is willing to pay for it. But after a vehicle is in an accident, demand for that car usually decreases. Buyers are not willing to pay as much to own it. The car’s value diminished because of the accident.
If you were in a car accident, you deserve compensation for the drop in your vehicle’s value. Unfortunately, many insurance companies resist paying for this loss. The Parrish Law Firm, PLLC can help you recover the damages you deserve. This includes compensation for diminished value. For a free case evaluation, call our office at 571-229-1800.
How Diminished Value Works
After a car accident, you probably will not feel an immediate hit to your pocketbook from the diminished value of your vehicle. It is similar to owning a stock that suffers a precipitous loss in value. It only affects you if and when you sell the stock at a loss. Unfortunately, while a stock has the potential to rebound in value, a car does not.
Your car’s diminished value will affect you when you go to sell it or trade it in. The insurance company should compensate you after your accident for the monetary loss you will invariably incur at a later date.
Selling or Trading In a Wrecked Vehicle
Getting your car fixed after the accident so it looks and drives as good as new is not enough. It is still a wrecked vehicle. Any dealership or prospective buyer can find out in minutes that your car was in an accident.
To illustrate this point, your car’s diminished value can hurt your finances whether you eventually sell the car or trade it in. Imagine you are purchasing a new car and you tell the dealership that you are trading in your old vehicle as part of your down payment.
At the next desk over, another customer is working a deal with another salesperson. This customer is trading in a car that is identical to yours in almost every way. It is the same make, model, year, and color, and it has the same mileage.
The only difference between your car and the other customer’s is the history. When the dealership pulls a CARFAX report for both vehicles, it discovers that your car was in a wreck and the other customer’s car was not.
A Wrecked Car Equals Less Money
After reviewing the CARFAX reports, the two salespeople return to their desks and make their trade offers. Your salesperson offers you $6,000 for your trade. Then you happen to hear the other customer, the one with the car just like yours, get offered $8,000 for their vehicle.
Because the dealership cannot sell your wrecked car for as much as it can an accident-free car, it has to pay you less. This diminished value makes you lose money.
How Insurance Companies Calculate Diminished Value
There is no standard method across the insurance industry to calculate diminished value. Different companies determine it using different formulas and adjustments. Some insurers do not recognize diminished value at all to avoid compensating drivers for it.
Before opening The Parrish Law Firm, PLLC, Jim Parrish worked as an insurance company lawyer. He bore witness to the tactics used by insurers. Now he has dedicated his career to helping accident victims. He uses the information he obtained from inside the insurance companies to give his clients a leg up when fighting for damages.
The Parrish Law Firm team will fight to get you compensation for the diminished value of your vehicle.
Call 571-229-1800 Today to Schedule a Free Case Evaluation
The Parrish Law Firm, PLLC fights for the rights of car accident victims. We can help you recover the all the damages available in your case, including diminished value. Our founding attorney knows how to take on the insurance companies. For a free case evaluation, call 571-229-1800.