Here's something I wish I had known about when another driver plowed into my car, a car that was only five months old: diminished value.
The other driver's insurance company paid to fix my vehicle, but just the fact that it had been in an accident diminished its value. Rightly so. It was no longer as sound. One former general manager says his dealership used to automatically offer 30 percent less for a trade-in if it had frame damage.
But it wasn't my fault. When I went to sell the car, the pros easily could tell that it had been wrecked and rebuilt. That other driver -- or her insurance company -- should have paid me for that. I couldn't get as much for the car, so I didn't have as much to put toward my next car.
Many people don't think about the new, lower value of their vehicle in the aftermath of an accident. Instead, we just worry about how long it's going to take for the body shop to fix the darn car so we can get back to our lives. If you have a newer vehicle or an expensive one, you must ask to be compensated for diminished value.
The insurance company won't offer. Insurance companies try to avoid paying for diminished value.
It's important to pursue a diminished value claim right away, because most states have a statute of limitations on property damage claims, often three years.
Most insurance contracts prevent you from making a diminished value claim against your own insurance company. Where you may succeed is by going after the other driver's insurance company because you don't have a contract with them. Plus, the whole point is that the accident wasn't your fault, right?
If the other driver's company resists, consider small claims court to collect diminished value. It should be a fairly easy case to prove: What was your car worth before the crash? How much less is it worth now because it was in an accident? You can also find a bunch of law firms online that specialize in getting people paid for diminished value.
Some of those firms estimate that the average value lost when a vehicle is in an accident is 33 percent. So let's say your car is worth $14,990. (I know, $15,000 would be easier math, but I'm trying to think like a used car dealer!) If you succeed with your diminished value claim, that 33 percent difference becomes your savings. Take a look:
Why Diminished Value Matters
Ford Taurus value before accident: $14,990
Ford Taurus value after accident: $9,893
$5,097 is a meaningful amount of money that you deserve to put toward your next car. Pursue diminished value and you can SAVE BIG.