The Diminished Value of a Car After an Accident

by Caryn Kelly

A guy runs a red light and slams into your car and now its value has just been diminished by several thousand dollars. Faced with an insurance claim, you wonder whether you can collect for diminished value. Your chances are slim, but it is possible to pursue a claim for diminished value in a few states.

Identification

Your car's value drops after it's been in an accident, even if it's been repaired by a highly reputable auto body shop. The difference in dollar amount between what your car was worth before the wreck and it's value in its repaired condition is known as diminished value--or diminution of value.

Causes

If an insurance company refuses to authorize necessary repairs recommended by a body shop, a car diminishes in value because of "claim-related" reasons. "Repair-related" causes result when a car is repaired by an inferior mechanic or when substandard parts are used.

Recourse

Insurance companies will pay for damage repairs after an accident, but in most states they don't have to pay a penny for diminished value claims. Some states examine who's at fault before they'll even consider making an insurer pay. In other states, the insurer is mandated to pay no matter who was at fault.

About the Author

This article was written by the It Still Runs team, copy edited and fact checked through a multi-point auditing system, in efforts to ensure our readers only receive the best information. To submit your questions or ideas, or to simply learn more about It Still Runs, contact us.

Photo Credits

  • photo_camera car crash image by dawn from Fotolia.com