When you’re hurt in a car accident, your injuries don’t prevent you from being concerned about your damaged car. You locate a reliable body shop, and you pay them to do quality repairs. You might not realize it, but even when a highly-rated body shop restores your car, the damage usually diminishes its value anyway.
To understand the diminished value concept, consider your own physical health before and after a serious crash. Even though you recover, serious injuries often leave you with scars and lifelong physical complications. Your damaged car goes through the same type of experience.
Accidents Generate Three Diminished Value Issues
Like many auto accident-related processes, a diminished value claim is more complicated than you might imagine. When your vehicle is involved in a serious accident, the damage downgrades your car’s value from the moment a crash takes place. You usually encounter three distinctive types of diminished value:
- Immediate: Your vehicle loses value immediately after it sustains damage in a crash. This diminution of value is the most obvious, and the value remains significantly less than usual until your body shop finishes the repairs.
- Inherent: Your car has a perceived loss in value even after your body shop completes the repairs. This occurs because of the mere fact that your vehicle was once in a crash.
- Repair-Related: Even when you choose your body shop carefully, there’s always a chance that the repairs won’t reflect the quality you expect. Cars often lose value due to improper repair techniques or unprofessional workmanship.
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How do Insurers Calculate a Diminished Value Claim?
Some insurers adopted State Farm’s 17 C claim evaluation formula. They originally designed it to deal with numerous diminished value claims in Georgia. The formula begins with NADA and Kelley Blue Book market values and then applies multipliers.
- Begin with a settlement maximum based on 10% of a vehicle’s NADA or Kelley Blue Book value.
- Apply multipliers based on structural damage severity and vehicle mileage.
The 17c formula is generic and doesn’t require a post-repair inspection. The formula also applies a mileage factor when both market value companies already include mileage in their calculations. It’s a simple method for evaluating DV damages, but it’s designed by an insurance company, and it clearly gives them a settlement advantage.
To resolve your claim for the best possible figure, you must conduct and present your own vehicle evaluation research. As Kelly Blue Book and NADA are accepted standards, you should include one or both in your evaluation. You must also negotiate a settlement that’s based on your vehicle rather than a generic formula.
Why It’s Important to Address Diminished Value
Diminished value is an accident-related financial loss, even if the insurance company doesn’t address it. Whether your car has a bent frame, axle damage, or a crumpled fender, a body shop can’t usually return it to its 100% pre-accident condition. You might not notice the minimally bent frame, slightly misaligned fenders, or paint mismatch, but a potential buyer will.
These telltale signs of damage become more significant when you decide to sell your car. Most buyers don’t want a previously damaged vehicle unless:
- They know about the previous damage and want to buy it anyway.
- You sell it for a discounted price.
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Diminished Value is an Old Concept
The idea of vehicles losing their value after an accident has been around for decades, but insurers have largely ignored it. It became a higher-profile issue in 2001 after a Georgia Superior Court ruled against State Farm in a diminished value class action lawsuit. Nevada courts have never ruled on a diminished value case, but insurers often pay the damages depending on whether it’s for a first or third-party claim.
- First-Party Claims: A first-party claim pays the insured’s damages based on their policy terms. Most auto policies specifically exclude “diminution of value” claims under collision and other first-party coverages.
- Third-Party Claims: An insurance policy’s liability coverage pays based on damages the insured legally owes. As insurers in many states acknowledge that they owe diminished value damages, they pay DV damages on third-party claims.
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Consumers Know More About Collision Damage’s Effect on Car Values
The Justice Department’s National Vehicle Motor Title Information System helps educate consumers on how damage reduces a vehicle’s value. They recommend that all used car buyers have a professional inspection to detect prior damage. They also connect buyers with approved research vendors who deal directly with consumers instead of car dealers.
Vehicle reports track odometer settings and major damage documented by title changes. These instances often involve salvaged, seriously damaged, or flood-damaged vehicles.
You Have a Right to Recover Damages for Your Vehicle’s Diminished Valued
With such a high degree of consumer awareness, your car’s diminished value will eventually translate into a financial loss. That’s why it’s important to seek reimbursement for your damages while your liability claims are still pending.
The Nevada Revised Statutes (NRS) §11.190 provides a three-year statute of limitations during which you must resolve all of your accident-related claims. If you fail to settle or file a lawsuit for your injuries, property losses, or diminished value claims, you lose your right to recover damages.
Contact a Nevada Personal Injury Attorney Today
When you’re involved in an accident, you need a personal injury attorney to protect your rights. At Pacific West Law, our attorneys work to recover your damages for your car’s diminished value and any other damages to which you are legally entitled. We resolve liability and injury evaluation issues, and we negotiate with insurers and their attorneys while you concentrate on your recovery.
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