Accidental Damage: Diminished Value and Your Car

If you haven’t been in a car accident recently—and we at McNeely Stephenson hope you have not—then you may not be aware of the term “diminished value.” Simply put, diminished value is the loss in the market value of your car that occurs when your car is damaged in an accident and is then repaired.  The theory behind “diminished value” is that your car, although properly repaired, may have declined in value simply because it was involved in an accident.  However, if you were at fault for the accident, you will not be able to recover for the diminished value of your car.

Ultimately, each case is unique, and the diminished value of your car will vary depending on its condition prior to the accident.  Clearly, if you just drove off the lot with your brand-new car and a guy sending a text message runs into your car, doing very serious damage but not enough to total the car, that is much different than if someone runs into your 2002 Civic with 242,000 miles on it.   We’re here to help you learn about the loss represented by diminished value and how you might recover it on your own.

The following information is provided in the hope of giving you a better understanding of what a diminished value claim is in Indiana, so you can determine whether this is an issue you need to discuss with a claims adjuster concerning damage to your car.  THIS IS NOT INTENDED TO BE LEGAL ADVICE and is intended only as another source of information you may wish to consider.

Diminished Value Law in Indiana

If you were not at fault in the accident, you may be able to recover the diminished value of your car from the company insuring the at-fault party. Additionally, in Indiana, thanks to the decision of Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005), if your accident was caused by an uninsured motorist, you may also seek to recover any diminution in the value of your car from your own insurance company under the “uninsured motorist” portion of your insurance policy.  This, of course, is subject to your “underinsured motorist” policy limits.

The statute of limitations in Indiana for this kind of claim is two years. That means you may claim diminished value on car accidents that happen in Indiana for up to two years after the crash.  Failure to file a lawsuit before the expiration of the two-year statute of limitations will result in your claim being forever barred.

Calculating Diminished Value

Insurance companies have their own formulas, and their own adjusters, who calculate the value of your car.  Generally, the adjusters take the following particulars into account when evaluating your car, comparing your car to another one having:

  • The same make, model, and year
  • The same factory-installed options
  • The same pre-accident condition (including mileage and previous accidents)
  • The same geographical location
  • A title free from legal defects.

Pursuing a Diminished Value Claim

Always ask the insurance adjuster handling your property damage claim whether they have calculated the value of your car both before the accident and after it has been repaired.  If you believe your car has suffered a loss in market value due to an accident that was not your fault, and don’t believe you are being properly compensated by the insurance company, you may consult a local professional in the car-buying industry for an estimate as to your car’s market value prior to the crash versus your car’s market value following repair. In the event that you are able to obtain evidence that your car has diminished in value due to the accident, you may present that evidence to the adjuster for the at-fault party, or for your insurance company if the at-fault party was uninsured.  If you are unable to resolve the matter with the insurance company and the diminished value of your car is less than $6,000, you may file a claim in your local small claims court without hiring a lawyer.  More information on Small Claims Courts in Indiana may be found here:  http://www.in.gov/judiciary/2710.htm.

*Disclaimer: The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.