Imagine this: you’re a proud owner of a $101,150 No. 8 Jaguar XK convertible and you’re cruising down Los Angeles when – BAM! – you get involved in a car accident. Just like the experience of many car owners, being involved in a car crash is a real pain, physically and financially. While the actual cash value of your jaguar may be worth a hundred thousand dollars, this can get dramatically reduced by more than half as much, depending how much of your car is still left after an accident.
One thing’s for sure, after a car accident, the actual cash value vs diminished value claims of your beloved auto will never be the same again.
Actual Cash Value
Following a car accident, if you have an insurance policy, most companies base their compensation on Actual Cash Value (ACV). This amount is computed by the car’s replacement value less depreciation.
The ACV may be determined through the following:
- Actual sales
- Online prices
- Value guide books and magazines
- Dealer surveys
Sales tax, registration, and title costs may also be a factor for ACV. The price would also be affected by your car’s condition, mileage, region as well as other options.
This kind of compensation is generally offered in most insurance policies – your car will be repaired and restored to its pre-accident condition.
Diminished Value Claims
However, in the event that you would rather buy a new car than have your jaguar repaired or if even after repair, the car is not the same automobile you cherished – you can file a diminished value claim.
Even if your No. 8 Jaguar XK convertible cost $101,150 and regardless how well it has been repaired after the accident, its value will still be diminished. So don’t be surprised to get a shockingly low offer (even by as much as 18 percent), if the car you’re trying to sell has been involved in an accident.
Take note however, that in some states, a diminished value claim cannot be filed with your insurance company. So be sure to read the insurance contract before choosing a policy because generally, insurers do not compensate the car’s perceived loss of value.
Payment of diminished value claims may also depend whether a federal court may require the insurance company to do so and in some instances, the factor of who is at fault for the accident may also be considered in such claims.
Actual Cash Value vs. Diminished Value Claims
When involved in a car accident, it would be best for you to assess on your own, aside from studying the compensation being offered by your insurance company, whether or not an actual cash value repair would be more suitable for your damages compared to filing for diminished value claims.
If you feel that your insurance company however, is offering you a bad deal and that you think you deserve to get more, consult with a car accident attorney to find out how you can obtain the best value for your damaged car.