What Is a Diminished Value Claim in Florida, and How Does It Work?

Florida Car Crash AttorneyA car accident can lead to substantial damage to your vehicle. Sometimes, you can get that damage repaired by an experienced auto shop. Unfortunately, even if the shop repairs the majority of the damage, it can still diminish the overall value of your vehicle.

Do you have the right to compensation for the losses you faced due to diminished value for your vehicle? Consulting a car crash attorney can help you understand how diminished value may impact your right to compensation.

Diminished Value: Defined

Diminished value refers to the change in market value your car suffers after an accident. Often, the damage from an accident can significantly change the value of a vehicle. Even if you have your car repaired and go through everything you need to go through to restore it, you may still face diminished value after the accident.

For consumers who still owe a significant amount on the vehicle or who intended to drive the vehicle for much longer, that diminished value can have a significant impact. Diminished value can impact the safety and reliability of the vehicle, decrease its anticipated life, or decrease resale value: all factors that can have immense importance to the victim in an accident.

An accident on record for the vehicle can also make it more difficult to sell the vehicle after an accident. Savvy buyers want to purchase reliable vehicles that do not need extensive repairs. As a result, accident victims may have a hard time finding a buyer who will take a chance on the vehicle or may need to sell the vehicle for a lower value than initially anticipated.

Generally, diminished value claims break down into one of three types.

Inherent Diminished Value

Inherent diminished value makes up the majority of diminished value claims. It occurs when the vehicle loses value due to a damage report on its history, which interested buyers can find when they look up the accident report on a vehicle.

Immediate Diminished Value

Damage to a vehicle can immediately decrease its worth. Sometimes, a  vehicle owner may choose not to repair it, which means that the vehicle’s value will diminish due to the damages. Most of the time, however, your auto damage claim takes care of immediate diminished value. The liable driver’s insurance policy will typically pay for repairs to the vehicle. If you choose not to repair the vehicle, the insurance company will pay you for the repairs.

Repair-Related Diminished Value

Sometimes, improper repairs, often due to low-quality parts, can also cause the value of a vehicle to diminish following a serious accident. Sometimes, your vehicle may suffer primarily aesthetic problems: a paint color that does not quite match the original paint, for example.

Other times, aftermarket parts or low-quality repairs can diminish the overall vehicle. Generally, repair-related diminished value claims occur because the vehicle, for whatever reason, cannot go back to its original condition.

Understanding Diminished Value Claims

Diminished value claims provide the difference between the car’s market value before the accident and its market value after the accident. Most states, including Florida, do not have laws that require an insurance company to pay out for diminished value resulting from an accident. Some policies, however, will provide coverage for the diminished value of your vehicle.

Always consult the insurance policy to learn what type of coverage it offers and whether it will offer compensation for diminished value to your vehicle after an accident.

To calculate your losses related to the diminished value of a vehicle after an accident, the insurance company may take a look at:

  • The initial value of the vehicle
  • The level of damage sustained in the accident
  • The number of miles on the vehicle

In general, insurance companies will pay out no more than 10 percent of the initial value of the vehicle in a diminished value claim.

How Should You File a Diminished Value Claim in Florida?

Do you believe that you have grounds for a diminished value claim after your vehicle sustained severe damage in an accident due to another party’s negligence? Follow these steps to move through a diminished value claim and increase the odds that you will get the compensation you deserve for your financial losses.

1. Contact the other driver’s insurance company and ask about their diminished value processes and coverage.

Generally, if you cause an accident, your insurance company will not pay for the diminished value of your vehicle. You may want to check your policy to determine whether you have this important coverage, since most policies will not offer compensation for diminished value when you cause an accident—even if you carry comprehensive or collision insurance.

You may, however, seek compensation under your uninsured motorist claim if the other driver does not carry insurance. Since about 20 percent of Florida drivers choose not to carry adequate auto insurance, you may need to deal with your insurance company to seek compensation.

The other driver’s insurance company, however, may pay for vehicle damage. Contact the insurance company and check the other driver’s policy and how much coverage you may deserve for the diminished value of your vehicle.

2. Note your vehicle’s original value.

Consult a reputable source, including Kelley Blue Book, to learn the original value of your vehicle. Kelley Blue Book will provide an estimate based on how well you have cared for your car throughout its life and its overall condition.

3. Have an appraisal done on the vehicle.

You may need to have your car appraised by a professional to determine how much its value has diminished from the car accident or the repairs to the vehicle. Seek out a certified appraiser who will give you a clear estimate.

4. Contact an attorney to discuss your diminished value claim.

In general, you should contact an attorney to determine how to move forward with a diminished value claim. Not only can an attorney help you go over the compensation you may deserve and determine whether you have grounds for a diminished value claim, having an attorney on your side may also increase the odds that the insurance company will offer the compensation you deserve for your losses.

Furthermore, an attorney can help negotiate with the insurance company, which can free you up to focus on getting your car repaired, dealing with any injuries you might have from the accident, and moving forward with your life.

Do You Have Grounds for a Diminished Value Claim?

If you think you may have grounds for a diminished value claim after an accident, consult an experienced attorney to learn more about your right to compensation.

In general, you may have grounds for a diminished value claim if:

  • Someone else’s negligence caused your car accident. Since most insurance companies will not provide diminished value compensation when their drivers cause a car accident, you will usually need to pursue compensation through the other driver’s insurance company. If the other driver caused your accident, you can usually seek compensation. This may include drivers who chose to drive while intoxicated, drive while distracted, or ignore the rules of the road and drivers who simply committed an error behind the wheel that resulted in the accident.
  • Your vehicle suffered significant damage that led to a decrease in its overall value. To file a diminished value claim, you will need to show that your vehicle suffered diminished value because of the accident. Your vehicle may suffer diminished value for several reasons. Sometimes, as in inherent diminished value claims, the vehicle may suffer diminished value because of the accident: other people will prove less likely to want to buy the vehicle, or it may sell for a lower price, as a result of the accident. Other times, the vehicle may suffer a loss in value due to the quality of the repairs performed on the vehicle. Sometimes, those repairs may result from an auto shop chosen by the insurance company.
  • You cannot return the vehicle to its original value. If you file a diminished value claim because of low-quality repairs, you may need to show that you cannot return the vehicle to its original condition, rendering the loss of value permanent. For example, if you chose to use aftermarket parts to repair the vehicle, you might restore it to something closer to its original condition by choosing better parts. In some cases, however, you can’t find those parts, especially for older or classic vehicles. In that case, the diminished value might remain permanent.
  • The insurance policy offers coverage for diminished value. Have an attorney look over the liable driver’s insurance policy to determine more about what compensation the policy offers for diminished value and how it may impact your claim. If the insurance company has clear policies that state that the company will not pay out for diminished value, you may not have grounds for a claim.

How Much Can You Recover in a Diminished Value Claim?

In most cases, in a diminished value claim, you can recover a maximum of 10 percent of the value of the vehicle. If, for example, you drive a vehicle worth $1,000, the most you will usually recover is usually approximately $1,000. The amount you can recover reduces based on the mileage on the vehicle at the time of the accident. The amount of damage to the vehicle may also affect the value of your claim.

An attorney can help review your claim, take a look at reports related to the vehicle, and give you a better idea of how much compensation you can expect as part of your claim.

When Should You File Your Diminished Value Claim?

Car Accident Lawyer Orlando, FL - Michael T. Gibson
Car Accident Attorney, Michael T. Gibson

If the other party caused your accident, in general, you should pursue compensation for the diminished value of your vehicle, especially if you drive an expensive vehicle. Filing a diminished value claim can also help provide additional compensation in an accident that caused severe injuries. In some cases, you may already have an attorney on your side. Your attorney can provide valuable advice about the lost value of your vehicle and how to include it as part of your claim.

If you plan to file a diminished value claim, you should get in touch with an attorney as soon after your accident as possible to learn more about your rights and move forward with your claim. You may want to file that claim within days of the initial accident. Moving the claim forward quickly can increase the compensation you can receive and increase the odds of a favorable outcome. You may also need to include your diminished value claim with the rest of the damage claim for your vehicle to ensure that you maximize your compensation.

On the other hand, in some cases, you may not discover the full extent of your vehicle’s diminished value until after the auto shop has completed repairs. You may need to give the shop time, for example, to discover whether you will need to use aftermarket parts, or whether the shop can find your vehicle’s original paint color. Even if you discover the true diminished value of your vehicle well after the initial accident, you may still pursue an actionable claim.

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