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.” But a lack of awareness of this concept can cost you some serious money. We’re here to help you learn about the loss represented by diminished value, and how you might recover it.
So, What Is Diminished Value?
- The difference between a vehicle’s resale value before an accident and after an accident, but before repairs, is called immediate diminished value.
- The difference between a vehicle’s resale value before an accident and after an accident, but also after the vehicle has been properly repaired, is called inherent diminished value.
- An additional amount by which the resale value has been reduced because repairs were inadequate is called repair-related diminished value.
Inherent diminished value, the kind that assumes the vehicle has been properly repaired, is what we will address here. It is the monetary valuation by which your vehicle dropped simply by being in an accident, regardless of how good the repairs are.
Diminished Value Law in Indiana
If you were not at fault in the accident, you are supposed to be able to recover diminished value. Indiana law says that you are likely entitled to a diminished value award from the company insuring the at-fault party. Unlike many states, Indiana will also allow you file a claim for diminished value against the “uninsured motorist” portion of your own policy if the at-fault party does not have insurance, or if you were the victim of a hit-and-run accident.
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 happened in Indiana up to two years before today.
Unfortunately, insurance companies often ignore diminished value claims. They realize that they usually won’t have to pay unless you take them to court and force them to do so. It may seem like just one more problem to deal with after your accident, but if your car is relatively new, or is a relatively expensive make and model, you could be losing thousands of dollars, even tens of thousands of dollars, by not filing a diminished value claim. So, you must take the insurance company to court within the two-year Indiana statute of limitations file for compensation for your loss.
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 vehicle 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
Once the insurance company produces a figure for the value of your car, you can and should ask them for an explanation of how they came up with their number. If you have documentation which would argue for a higher figure, such as an exceptional pre-accident condition, produce it. If the figure you are given by the insurance company is lower than one would expect for your car in pre-accident condition, the difference is diminished value, and you should try to collect it.
However, you should expect that the insurance company will show you the lowest valuation figure they possibly can, which means you would probably want to consider bringing a claim for the diminished value of your vehicle. In that case, you will need to find your own expert appraiser to assess your vehicle’s value both before and after the accident (in its repaired condition). Be sure to provide the expert with all information you have about your car’s pre-accident condition that would mean a higher valuation figure. After that, you will have to wrangle with the insurance company.
Because of the nature of these kinds of claims, you may find it best to seek legal help to pursue a diminished value claim successfully. After all, insurance is supposed to make us whole after an injury or accident—that’s why we pay premiums. If the insurance company is not doing that for you, going to court would likely be your next step.
When others breach their duty, we keep ours.
Automobile accidents have human costs. They also have monetary costs, such as diminished value. While monetary compensation can never undo other damages done as the result of an accident, a financial recovery can help ease pocketbook burdens. If you think you might have a diminished value case, keep in mind that in Indiana there is a statute of limitations – or a deadline – for filing personal injury claims, so it is unwise to delay.
Mike Stephenson is a Martindale-Hubbell AV-rated attorney, the highest possible attorney peer rating. When you call Mike, you can have complete confidence that you are talking with an Indiana lawyer with over 30 years’ experience offering compassionate and successful representation for his clients. Call Mike Stephenson at 1-855-206-2555 or contact us for immediate help. McNeely Stephenson. Trusted advisors. Proven advocates.