If your vehicle accident was caused by another driver, you should be “made whole” through an insurance claim or legal action. You should be put back in the same financial situation you were before the crash, including the value of your vehicle.
After a car accident, if you file an insurance claim and the repair cost exceeds your car’s value, the carrier may “total” your car and pay you what the vehicle’s worth. If the damage isn’t that severe, your car should be repaired so it’s just as good as it was before the accident happened.
That may sound like that should be good enough, but with the increasing availability of information, it’s not. With services like CARFAX, the potential buyer will know it’s been in an accident when you sell your car. That will probably decrease what they’re willing to pay, so you’ll suffer financially because of the crash.
What is Diminished Value?
There are different ways to define it:
- Repair-related diminished value: Lost value because the car can’t be perfectly repaired. Since the car’s not in as good shape as it was before the crash, it’s worth less
- Immediate diminished value: The difference in the resale value before the damage occurred and the resale value after damage happened, before the repairs. This also covers the lost value because of the insurer’s direct involvement in the repairs, which may result in incomplete or insufficient repairs, leaving the car in a substandard condition
- Inherent diminished value: The amount the resale value of your repaired car is reduced because of the accident
Inherent diminished value is the most accepted version.
Can Insurance Pay Me for Diminished Value?
The Texas Department of Insurance (TDI) states that if you make a claim against your policy (a first-party claim), the carrier’s not obligated to pay you for diminished value (unless it’s repair related). You would file against your policy if you’re at fault for the accident.
If you file a claim on the uninsured/underinsured coverage part of your policy (the driver responsible for the accident lacks sufficient coverage to pay for your losses, so you make a claim under this part of your policy), you can be paid for diminished value, no matter how well your car was repaired.
You can also make a claim (considered a third-party claim) for diminished value on the other’s driver’s policy. The TDI states:
“An insurer also may be obligated to pay a third-party claimant for any loss of market value of the claimant’s automobile, regardless of the completeness of the repair, in a liability claim that the third-party claimant may have against a policyholder.”
Under Texas insurance law, seeking compensation for your vehicle’s diminished value is fair game if you’re not responsible for the accident.
How is Diminished Value Determined?
It could be determined in many ways, based on the make, model, year, features, and repairs. You may need an expert to come up with a valid number. The insurance company may also have a set formula it uses to estimate the diminished value.
Should I Hire a Schechter, Shaffer & Harris Car Accident Lawyer?
Call Schechter, Shaffer & Harris, L.L.P at 713-893-0971 if you need a Houston personal injury lawyer with years of regional court system experience. We help people like you obtain settlements and win judgments for compensation for their injuries and the diminished value of their vehicles. Contact us today to schedule your free consultation and begin the process to get the recovery you deserve.