Don’t forget about demanding reimbursement for “Diminished Value” When settling the insurance claim on your damaged car.

Walking away from any car accident is a true blessing not to be taken for granted. In the grand scheme of things, suffering through an insurance settlement after a car accident is the best result one could hope for.

Most accidents occur when people are in busy mode. Usually, when too many other busy people are driving at the same time. Of course, when we are in busy mode, the last thing we need is a car accident. Dealing with emotions from other drivers involved, filling out police reports and making insurance claims is just the beginning. Next stop, the body shop, no picnic here either. Usually, the only people who are as eager about getting this over with is your insurance company. Their motive is not usually all about customer satisfaction.

The insurance adjuster is trained to put us at ease with the single idea of getting the insurance company to fix the car correctly so we can be happy driving it again. The idea that the car will be less valuable after the accident is not a topic that is introduced by the adjuster. It’s all about getting the car fixed. So, the body shop finishes the car, the insurance pays all but the deductible and we think, yay, it’s finally over!

“Home sweet home”, we say as we settle back into our car’s driver seat and into our normal routine. Then the day comes when we must sell the or trade the car. The dreaded question is soon heard. “Does it have a clean history report?” As we begin to explain how the accident happened, we notice the disappointment on our buyer’s face. As we finish the story, the buyer has already decided to politely exit the conversation as soon as possible. If your trading, the dealership reconsiders the trade value when they see the history report. After all, they will have to work through the challenge of selling a previously damaged car. Either way, you are about to lose another thousand or two.

Surprise! Our prized possession has had a lower market value since the accident was published on the history report. If the accident was not our fault, we should have insisted that our insurance company reimburse us with extra money to make up for the amount we will lose when we sell or trade.

The term “diminished value” is a term that quantifies the value deduction for cars that have been in an accident compared to those which did not. As a dealer, I regularly do research on cars I am listing compared to my competitor’s cars listed. Almost always, the lowest price similar cars are the ones that show an accident on the history report. When presenting cars to customers, one of the first questions I hear relates to the vehicles’ history report. A high percentage of buyers refuse to consider a car that has been documented to have been damaged and repaired.

To figure out the diminished value of your car, get a pre-accident private party value from online resources such as Edmunds.com or KelleyBlueBook.com. Then deduct between 10-15% depending on the value. Anything over $20k blue book value should be around 10%. Anything less should be an upward sliding scale.

There are some exceptions to the diminished value calculation.. These include vehicles that are unmodified, very well preserved vehicles. These vehicles have maintained a greater value only because they have been preserved in their original state. Especially, with very low documented mileage. For these, a higher percentage of diminished value applies. Otherwise, a straight 10-15% can be used in most cases.

Suggestion: Don’t be too hasty when settling your claim. If it’ not your fault. Demand payment for diminished value BEFORE you sign off the repair estimate.