If you’ve ever been in a car accident, you understand how costly they can be. In addition to repairs, you may also need to take time off from work and spend money on medical care. There’s also an additional cost you may not have considered: your car’s decreased market value. Even after you’ve had the damage repaired, your vehicle will have a lower resale value simply because it was involved in an accident. 

Thankfully, there are different types of auto insurance policies designed to address the various losses you can experience after a collision. Diminished value claims, specifically, can help compensate for the loss in market value after an accident. Read on to learn more about how diminished value claims work and how to file one.  

What is a Diminished Value Claim?

Typically, one driver will be considered at fault for causing an accident. In Minnesota, the not-at-fault driver can file a diminished value claim with the at-fault driver’s insurance company within 6 years of the accident. Vehicle reports often include records of auto accidents, which can significantly decrease a car’s resale value. However, a diminished value claim can provide a way for not-at-fault drivers to recoup some of this loss. 

The “diminished value” represents a percentage of the vehicle’s value. Most insurance companies cap diminished value claim amounts at 10% of a vehicle’s pre-accident appraised value. This figure can be adjusted based on several factors, including the level of damage the car sustained and its mileage leading up to the accident. It’s worth noting that the payout amount for a diminished value claim may only be a few hundred dollars—even if it’s lost thousands of dollars in value. Ultimately, the circumstances of the accident and the insurer’s policies will play a significant role in determining the payout for a diminished value claim. 

When a driver’s car is damaged in an accident, the at-fault driver’s insurance company will typically pay for repairs. However, if the not-at-fault driver believes the accident will cause a significant decrease in their car’s resale value even after it’s been repaired, they can file a diminished value claim to receive additional compensation. Although the claim may not fully make up for the lost value, it can alleviate some of the financial burdens the not-at-fault driver experienced after an accident. 

The Three Different Types of Diminished Value Claims

Cars that have been involved in an accident lose value in two ways. First, simply having a record of an accident for your car makes it less valuable. Second, your car can also lose value due to the quality of the repairs or the replacement parts that are used. There are three different types of diminished value claims; the differences between these claims are related to the timing of the repairs and their value:

• Immediate diminished value claims: These claims are intended for vehicles that haven’t been repaired yet and take into account the loss of value by being in an accident and needing repairs. 
• Inherent diminished value claims: These claims are made after the repairs have been completed and are focused on your vehicle’s value loss by being in an accident. 
• Repair-related diminished value claims: These claims are focused on the quality of the repairs performed. For example, a vehicle that’s repaired using OEM (original equipment manufacturer) parts is worth more than a car repaired using aftermarket parts. 

When Can You File a Diminished Value Claim?

There are several requirements for filing a diminished value claim:

• You must be deemed not at fault for the accident. 
• The at-fault driver must have auto insurance. 
• Your vehicle had value before the accident. 

It’s important to note that you can only file a diminished value claim against the insurance of an at-fault driver; if the at-fault driver is uninsured or underinsured, it may be nearly impossible to file a claim. In addition, your car must hold some value. For example, if you have a 20-year-old car with 300,000 miles and pre-existing damage, it likely won’t be a candidate for a diminished value claim. In contrast, a car that’s in like-new condition with only 8,000 miles is much more likely to receive compensation. 

How to File a Claim

You’ll file the claim with the at-fault driver’s insurance company, so be sure to ask them about their policy for submitting claims. Make sure to gather all the information the insurance company needs, like a police report that determined who was at fault, photos of the damage, and repair bills or estimates. In some cases, you may also need to have your vehicle appraised. Keep in mind that depending on your car’s value and pre-accident condition, the payout may be low—especially if the at-fault driver’s insurance company has already compensated you for repairs. 

If you’ve been involved in an accident, the costs can add up quickly—and your car’s decreased market value can also be a significant loss. However, if you’ve been declared not at fault, a diminished value claim and high-quality repairs can help you reclaim some of the value. Whether you need an alignment after an accident or factory-scheduled maintenance, Signal Garage Auto Care is here to help. Our ASE-certified technicians use factory repair methods and OEM parts to ensure your car retains its value. Schedule an appointment today at one of our three convenient locations!  

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