What is Diminished Value in a Georgia Car Accident Claim?

Following an auto accident, you will likely require vehicle repairs to get back on the road. If a skilled shop does the repairs, you may not even be able to tell that your vehicle was ever in an accident. Unfortunately, even if your car looks the same as it did before the collision, its value will still decrease because most buyers prefer to purchase used vehicles that do not have any accidents in their history. This loss of worth due to an accident is known as diminished value.

You have the right to seek compensation for the diminished value of your vehicle as part of your car accident claim. However, many people do not even realize this is an option because insurance companies are not required to inform customers about the diminished value of their vehicles. Even when individuals are aware of diminished value, obtaining the maximum compensation they deserve from the insurer can sometimes be challenging. An experienced car accident attorney can help you with this and other aspects of your claim to ensure you are not leaving money on the table after a crash.

Is Diminished Value the Same as Depreciation?

Depreciation is the inevitable decrease in your car’s value over time due to use and age. The concept of depreciation is quite different from diminished value because depreciation only factors in general wear and tear on a vehicle, not the significant value changes that can result from a serious accident.

When you decide to sell or trade-in your vehicle, all accidents will appear in the car’s history, and that information will negatively impact its resale value. This diminished value occurs in addition to any depreciation in the vehicle’s worth.

What are the Types of Diminished Value?

Diminished value can be categorized into three main types, depending on the timing and circumstances of the calculation:

  • Inherent diminished value: This type is the most commonly used in claims. It is typically what people are referring to when they discuss diminished value. It is the difference between the value of your vehicle pre-accident and after proper repairs have been made.
  • Repair-related diminished value: If the mechanic or auto body shop did a poor job of repairing your vehicle, such as using aftermarket parts instead of original equipment manufacturer (OEM) parts, your car may lose more value because it has not been returned to its original condition. If your insurer required you to use a shop that made subpar repairs, you may be able to seek compensation for this additional reduction in your car’s value or get paid for further repairs to correct the errors.
  • Immediate diminished value: This type of diminished value is calculated right after the accident and before any repairs have been made. Immediate diminished value is used less frequently in claims than the other types because your insurer or the at-fault party’s insurer typically pays for all necessary repairs.

What Facts Should You Know About Diminished Value in Georgia?

Understanding diminished value and how it may apply to your car accident claim is key to recovering the maximum compensation for your losses. Some important facts you should keep in mind when considering seeking diminished value on your damaged vehicle include the following:

  • You can file a diminished value claim regardless of who was at fault for the accident.
  • The insurer must pay for diminished value if you meet the qualifications.
  • Your insurer cannot raise your rates or cancel your coverage for receiving a diminished value payout.

Diminished value is typically calculated by the insurer using the “17c” formula, which places a 10% cap on all claims and then uses modifiers that reduce the total payout further. This calculation was first used by State Farm Insurance in a Georgia class action lawsuit and most insurance companies have since adopted it.

However, this is not the only possible formula, and it may result in a lower payout than the actual diminished value of your vehicle. You have the right to disagree with the insurer’s diminished value calculations. Legally, the burden of proving the appropriateness of their methodology then falls on the insurer. If you feel you are not receiving the correct diminished value on your vehicle, contact a trusted Georgia car insurance attorney to discuss your legal options.

When Might Diminished Value Not Apply?

Only some cars involved in an accident will qualify for a diminished value payout. Factors that could cause your diminished value claim to be denied are:

  • Suffering less than $500 in damages
  • Having a vehicle manufactured ten or more years ago
  • Experiencing a total loss on your car
  • Driving your vehicle more than 30,000 miles per year
  • Having a pre-accident vehicle value below $7000
  • Possessing a salvage title
  • Being involved in previous accidents that caused more significant damage to the car
  • Waiting until the statute of limitations has passed before filing your claim
  • Previously accepting a crash settlement and signing a release of liability form

How Can an Experienced Car Accident Attorney Help You Get the Most Out of Your Accident Claim?

Car accidents usually result in immediate expenses, such as medical bills, lost wages, and vehicle repair costs. With so much to think about, it can be easy to forget the long-term costs of a crash when attempting to recover payment from the insurance company for your losses. Diminished value is a frequently overlooked damage, but it is essential to consider if the accident has caused the resale value of your car to decrease. Our helpful car accident lawyers at Sessoms Law Group can evaluate your claim and make certain you have the best possible chance of recovering fair and full compensation for your damages. Contact our Atlanta office today to get started: 678-853-7402.