A diminished value claim is one of the murkier aspects of an insurance claim. Diminished value refers to loss in market value for your car as a result of damages incurred during an automobile accident. Since a car cannot be fully restored to the exact pre-accident condition, it is worth less. The value placed on that loss is usually a matter of negotiations with the insurance company.
Types of Diminished Value
The first step in determining diminished value is identifying the appropriate type of claim. There are different types:
- Inherent Diminished Value – loss in resale value due to repairs even though car had high quality repairs
- Repair Related Diminished Value – loss of car value when repairs are not high quality and damage is still evident despite repairs
- Estimate Related Diminished Value – loss of value due to the insurance adjuster ordering repairs made to auto components rather than replacement parts being installed, or some repairs are excluded
- Immediate Diminished Value – loss of car value before repairs are made
When you make a claim for diminished value, you are claiming that one of the preceding conditions exists.
When Your Claim is Rejected
Though it would seem that the diminished value claim would be compensated by the insurance company in any auto accident, there are certain conditions that must be met. For example, you cannot be at fault for causing the accident. Also, the car cannot be a total loss because a different settlement calculation applies. Many insurance companies also have a diminished value floor amount meaning a certain amount of damage must have been incurred.
The amount for a diminished value claim will be included in your Demand Letter. But be prepared for the diminished value claim to be rejected if you cannot clearly and thoroughly document the amount. If the claim is rejected, you can take the following steps:
- Attempt further negotiations with the claims adjuster
- File an appeal with the insurance company per their policies
- File a complaint with the state insurance board
- Hire an attorney to intercede in the negotiations
Insurance companies are not interested in paying diminished value claims, and if your claim is more than approximately $2,000 you are advised to hire an attorney.
Get Legal Help
Getting legal help can expedite the claims negotiations process. When any part of a claim is rejected, it will delay all compensation. If you believe you are owed diminished value, an attorney can negotiate with the insurance company to make sure you are treated fairly.
