Despite expert repairs, your vehicle may still be worth less on the market because it has been involved in an accident. Because people believe that cars with damage are not as trustworthy, their resale value is lowered. When another driver is found negligent in California, you can use their insurance to claim the money lost because of the accident.
Bringing a diminished value claim helps you protect your finances. The value of your car can be affected by things you cannot always see, not only by scratches or dents. In this article, you will learn the types of diminished value, the role of fault determination, how insurers assess your claim, and the difficulties in supporting your claim. After learning this, you will be more ready to deal with the claims process and receive a fair settlement for your vehicle’s loss.
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Scope of Recovery
Property Damage vs. Personal Injury Damages
According to California law, two main types of damages are recognized after a car accident:
- Personal injury damages
- Property damage
When someone suffers a physical injury, they may receive personal injury damages for their medical bills, lost income, and pain and suffering. On the other side, property damage means damage to your car and other things you own.
A diminished value claim is considered part of property damage. Just because your car is repaired does not mean its worth in the market will increase. It is not the scratches or broken parts that matter, but the stigma that comes with a vehicle involved in a crash. Those interested in buying might be concerned about its past and ask for a lower price or decline the property.
Role of the At-Fault Driver’s Insurer
In California, the at-fault driver's insurance company pays the damages. If someone else’s carelessness caused the accident that lowered your vehicle’s value, you may file a claim with their insurer. This claim requests that you receive the difference in value between your car before and after the accident.
Nevertheless, if you played a part in causing the accident, your damages may be lowered by California’s comparative negligence rules. If you are found 20% responsible, the damages you can recover will be reduced by 20%.
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Types of Diminished Value Claims
After a California accident, your car could still be worth less than before, despite any repairs. Three types of diminished value are recognized:
- Inherent (stigma) diminished value
- Immediate diminished value
- Repair-related diminished value
Grasping these categories helps you handle the claims process and receive the compensation you deserve.
Inherent (Stigma) Diminished Value
The market value of a vehicle is reduced by inherent diminished value if it has been in an accident, even if it is completely repaired. Even if a car is repaired and looks just as it did before the accident, many buyers will hesitate and offer less money. This is commonly known as stigma damage or residual diminished value.
The usual wear and tear causes depreciation, but the vehicle’s accident history causes inherent diminished value. How severe the accident was, how much damage occurred, where the damage is located, and the quality and visibility of the repairs are all factors in this stigma. For example, a car with significant damage to its structure, no matter how well it is repaired, could be seen as less reliable, reducing its worth in the market.
Should another driver’s mistake lead to the accident in California, you can file a diminished value claim with their insurance company to recover your loss. But it is worth noting that showing inherent diminished value can be tough, as you usually have to provide detailed evidence and have it checked by an expert.
Immediate Diminished Value
Immediate diminished value is the decrease in a vehicle’s market value after an accident, before any repairs start. The concept refers to the value lost from the vehicle’s condition, regardless of how much or how well it is repaired. Since most vehicles are fixed fast, few people ever need to make this claim.
It means the difference between what the vehicle was worth right before the accident and what it is worth right after, before any repairs are done. If the value of a car was $25,000 before an accident and it is now worth only $7,000, the immediate diminished value is $18,000.
Rarity and Insurance Repair Payments
Insurance policies generally cover the cost of repairs, so few people make immediate diminished value claims after an accident. As the car is returned to the way it was before the accident, the quick drop in value is usually not paid for separately.
However, realizing immediate diminished value is essential because it highlights the possible financial impact of an accident before repairs are done. Even though it is rarely mentioned, it helps explain why a vehicle’s value drops after an accident.
Repair-Related Diminished Value
Repair-related diminished value is when a vehicle’s worth on the market drops because the repairs were not done correctly or fully. Even if the car is fixed, any issues that buyers can notice or use can make them doubt its reliability, which may cause its value to decrease.
This loss is caused when repairs after an accident do not bring the vehicle back to its previous state. Using poor parts, not repairing properly, or missing some damage during the repair can lead to such problems. These issues can lower a buyer’s confidence in the car and make it worth less on the market.
Several things may result in a car’s value being less after repairs:
- Using Aftermarket or Used Parts: Using non-original OEM components instead of damaged originals can influence the vehicle’s performance and life, causing its value to fall.
- Corner-Cutting Repair Tactics: If welding is done improperly or the repairer fails to fix the main problems, it can make the vehicle unsafe.
- Paint and Finish Mismatches: When the color or texture of the repair is not the same as the original, it may look unpleasant and show that the repair was not well done.
- Residual Damage: If some damage, like misaligned frames or unnoticed mechanical issues, is not fixed, it can still cause problems for the vehicle after repairs.
- Incomplete Restoration of Factory Features: If the sealants, soundproofing, or rust protection are not replicated as in the original factory, it can cause further issues and prove that the repairs were not entirely done.
The best way to determine repair-related diminished value is to seek a professional appraisal. An independent appraiser can notice and document any repairs that were not done properly, giving a report that can help with a diminished value claim. The report can help you negotiate with insurance and take legal action if needed.
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The Impact of Fault
If you are found at fault for a car accident in California, you would not be able to recover much for the diminished value of your car. Most auto insurance policies do not cover diminished value when the policyholder causes the accident. If you have an accident, your insurance company would not cover the loss in your car’s market value, even after it has been repaired. It is common for these exclusions to be part of every policy, as insurance only covers unexpected losses, not those caused by the policyholder.
If you collide with an object that does not move and your car is damaged, any drop in its resale value because of the accident would not usually be covered under your insurance. This shows why you should read the details of your car insurance policy, especially those related to first-party diminished value claims.
Statutory Exceptions
Many policies exclude at-fault drivers from recovery, but California law has some exceptions that still allow you to recover diminished value, regardless of who was responsible. If someone else caused the accident, you can file a claim against their insurance company to get money for the difference in your vehicle’s value. In California, you can claim compensation from the at-fault party for everything you lost, including a decrease in your car’s resale value.
In addition, California Insurance Code Section 11580.2 states that an uninsured motorist property damage claim can cover diminished value, as long as the at-fault driver is found. Because of this law, you can still recover your car’s value loss if the responsible party is uninsured.
Most of these protections are for claims filed by third parties, not by the insured. Even if you use your insurance, your policy may rule out diminished value coverage. Therefore, it is essential to know the differences between first-party and third-party claims and the necessary laws to recover diminished value in California.
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How Insurance Companies Make Calculations
Most of the time, the insurance company in California uses the 17c formula to decide how much to pay for a diminished value claim. The formula is based on the 2001 Georgia case, Mabry v. State Farm, which is now considered the industry standard. You start by finding out your vehicle’s pre-accident value, usually with the help of NADA or Kelley Blue Book. Once the vehicle’s value is set, the insurer limits the possible loss to 10% of that value from the accident. Base value loss refers to this figure.
Damage Multiplier
After determining the base loss, the insurer changes it by applying a damage multiplier. It measures how badly your car was affected by the accident. It is possible to find a scale that goes from 0.00 for no structural damage to 1.00 for severe damage. If there is moderate damage to your car, a multiplier of 0.50 might be used. This step measures the impact of the damage on what your vehicle is worth.
Mileage Multiplier
The mileage multiplier is used next to adjust for your car’s age and the amount you drive. The higher your mileage, the less your accident will affect your car’s value. The scale is usually used in this way:
- You get 1.00 for every mile up to 19,999.
- 0.80 per 20,000–39,999 miles
- For 40,000 to 59,999 miles, the price is 0.60 per mile.
- 0.40 per mile for vehicles with 60,000–79,999 miles on them
- 0.20 for every 80,000 to 99,999 miles driven
- Free for 100,000 miles or more
The insurer uses the multiplier to make the diminished value calculation fit your car’s condition.
Disadvantages of the 17c Formula
Even though the 17c formula helps structure the process, some say it may not give enough weight to claims. A significant issue is that the base loss of value is capped at 10%, which can overlook the actual depreciation in rare or expensive cars. It is also argued that the formula lowers the value twice: first by basing it on mileage and again by using the mileage multiplier. This process can reduce the compensation you receive.
If you feel the 17c formula is unfair to your vehicle’s value, getting help from a lawyer or an independent appraiser can be helpful. These steps can help you know the worth of your claim and get the best compensation.
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How to Support Your Claim
How strong your evidence is when filing a diminished value claim in California can determine your success. Companies may use formulas like the 17c to calculate your car’s loss, but these do not always give an accurate result. You must obtain solid, separate evidence to support your claim.
Getting an independent appraisal report is one way to support your claim strongly. Appraisers with expertise in vehicle assessments focus on a vehicle's value after an accident, considering aspects that simple formulas miss. The reports they prepare are necessary proof when negotiating with insurance companies.
A dealership’s sales manager's written estimate is another applicable proof. Accident history is something dealerships understand can influence a vehicle’s resale value. In writing, a sales manager may explain how much they would offer for your car, less than they would pay for a similar model that has not been in an accident.
You can also support your case by comparing the market to yours. When you compare the values of cars like yours, with and without accident histories, you can prove that the accident has lowered your car’s worth. Information gathered by comparison can be strong evidence during negotiations.
Comparative Analysis
To demonstrate how much your car is worth less, you should compare it with similar vehicles. The first step is to find cars of the same type, model, year, and condition as yours, but without any accidents. Check the market prices of these companies. After that, compare the damage amount to your car's value after the accident. The amount by which the value has been reduced can be measured.
If cars without accidents sell for $20,000, but yours is valued at $17,000 because of its history, the $3,000 difference means the accident has reduced its value. Having the data, along with the appraisers’ and dealerships’ documents, helps prove your claim.
Gathering and presenting the evidence carefully improves your chances of getting a good outcome in your diminished value claim.
Frequently Asked Questions (FAQs)
Can I file a diminished value claim if I was at fault for the accident?
You cannot file a diminished value claim in California unless you were not at fault. Diminished value claims are often brought by people who are not responsible for the accident and want compensation from the at-fault party's insurance company. If you are in an accident in California, the driver to blame is responsible for covering the losses, including any decrease in the vehicle’s value.
Is it possible to recover diminished value if my car was totaled?
No. You cannot claim diminished value when your car is written off as a total loss. If this happens, you will only receive your car’s actual cash value (ACV) at the time of the accident. A diminished value claim can be made if the car is fixed and kept after the accident, but its value drops due to the accident.
Will making a diminished value claim cause my insurance premium to rise?
If you file a claim with the other driver’s insurance, your rates should remain unchanged. Nevertheless, if you decide to file a diminished value claim with your insurance (which is uncommon in California), your rates could go up if you’re found to be at fault.
Should you hire an expert appraiser when making a diminished value claim?
If your car is a newer model, luxury brand, or holds a high market value, then yes. An appraiser’s detailed report can help you convince the insurance company and improve your position when making a claim. Most insurers will not take a diminished value claim seriously without a third-party valuation.
Find an Orange County Personal Injury Attorney Near Me
If someone else’s negligence leads to an accident in California, you could be eligible for a diminished value claim. This claim covers the loss in your vehicle’s value, even after it has been repaired. You should know about the three types of diminished value: inherent, immediate, and repair-related. Moreover, learning how fault is determined and the 17c formula used by insurers can affect your claim.
It is not easy to handle these complicated issues. A qualified lawyer can give you the advice you need to get the best compensation.
At Orange County Personal Injury Attorney, we focus on helping clients make diminished value claims. We guarantee our team will work hard to ensure you are given fair compensation for your vehicle’s loss in value. Call us today at 714-876-1959 for a free consultation, and we will help you get what you deserve.
