Car accidents are expensive, not just for the car, but also in terms of lost time, inconvenience and money. For some people who live far from their work or school, a car accident can be life-changing. If you've been involved in an accident recently and you're wondering what to do next then this post is for you! We'll discuss how much value your car loses after a wreck as well as ways to protect against that loss as well as how to file a diminished value claim and calculate your car's diminished value after an accident. The last thing anyone wants is to have more expenses on top of their recent crash so we'll give tips on maximizing your settlement check so it covers the cost of any damages incurred during the collision.
When a car is totaled, the insurance company will typically pay you an amount that's close to what your vehicle was worth before it came into contact with the other driver. If you hold on to your old wreck for too long though, because your car's value could depreciate significantly which means that when you finally sell or trade it in later down the line, any money received from those transactions won't cover all of your losses.
The best thing to do after an accident is get rid of your damaged car as soon as possible so no one else can take advantage of its loss of value. That way if anyone tries to buy it they'll know how much work needs done and you can rest easy knowing you didn't trick someone into buying a damaged vehicle, as the vehicle history report will show a recent accident.
Diminished value is the difference between what your car was worth before an accident and its current market value.
Simply put, a diminished value claim means that you're entitled to money from the other party's insurance company for anything less than full compensation of damages stemming from their negligence and the difference in your car's value prior to the accident and after the accident. This amount can be calculated by evaluating how much it would cost to repair or replace property with comparable specifications as yours or estimate depreciation in resale price due to loss of value on the vehicle. The rule also applies when your vehicle has been lost through theft so any financial loss incurred because of this incident may also be eligible for reimbursement
The value of a car after an accident is calculated using three factors: the pre-accident market value, the cost to restore or replace and depreciation.
For example if your vehicle was worth $20,000 before being involved in an accident that caused $5000 worth of damage then it will be valued at around $15,000. In this scenario you would receive a diminished value claim for lost equity equal to the difference between what it was worth before and after ($1500) plus any incidental damages like medical expenses (if applicable). The law considers depreciation when calculating a diminished value claim related to theft as well so if your Chevy Volt had been stolen two days ago and recovered yesterday with significant body damage but still runs fine you might also have cause for a diminished value claim with your insurance company.
Accidents on carfax reduce the value of a car by about 40% according to an article in Forbes.
Other factors that affect the car's value are: age, mileage, make and year. In general newer cars have higher prices than older ones - so if you buy a new one it will lose less value over time than used models. Also luxury vehicles might still sell for more money even with accident history because they're highly sought after while budget brands like Ford or Chevy typically depreciate faster when accidents happen.
As I mentioned earlier depreciation is also calculated into losses related to theft as well so if your Chevy Volt had been stolen two days ago and recovered yesterday with significant body damage but still drivable, the value will be diminished by the theft, and then damaged in a collision.
Assume that 40% of your car's value was lost after an accident - but you need to know if it's worth fighting for more money? You can go through all these calculations to determine whether or not it is worth pursuing further legal action concerning the diminished value claims. Depending on your insurance companies policies, they'll pay up to $25,000 for repairs or replacement necessary as a result of this type of diminished value so at least there will be something coming out of pocket instead of being on the hook for paying some big repair bill because when looking at depreciation losses from collision insurance we're talking about 15%-20%. This loss of value of your vehicle can affect the formula to calculate trade in value if you want to purchase a new vehicle as well.
The first step to filing a diminished value claim is to find out if your insurance policy includes a diminished value claim.
If it does not include that protection then go ahead and calculate what you would expect to receive by determining the diminished trade-in value (DTOV), loss in market value (LIMV) and reduced resale values after an accident. You can use sites like Kelley Blue Book to calculate the value of your vehicle. Go back through each calculation again and determine whether or not it's critically important in your claim that you have comprehensive and collision coverage, as these all play a part in your diminished value claims with insurance companies.
The cost of a car is dependent on its condition before being damaged, so if the damage was minimal then there are ways for consumers to save money following a minor incident while ensuring their vehicle retains good condition. Depending on what insurance company you have, you may want to maximize the loss of value on your vehicle to obtain more money when you file a diminished value claim.
If the damage was minimal then there are ways for consumers to save money following a minor incident while ensuring their vehicle retains good condition.
One of these is by purchasing car accessories such as tinted windows, which can be installed at the time of an accident repair to reduce heat build-up in your vehicle during summertime months. And if you're looking for protection against expensive repairs and high insurance rates, adding extended warranties and service contracts (alongside comprehensive coverage) may help alleviate some expenses down the road as well. Insurance companies take into account your life time value when calculating your diminished value claims, and the value of your vehicle will be a hot topic.
Netter's insurance company will typically pay for the diminished value of your car following an accident.
This is because, similar to a collision damage waiver (CDW), it covers what you would have owed had you not purchased this type of coverage; by that same token, if it doesn't then all bets are off in terms of who pays the diminished value and when they kick-in.
One thing worth noting here is that the amount paid out from Netters' insurer can vary considerably based on their policies and procedures which could see them cover up to 100% less than expected or only reimburse 20%. It just depends on how much they deem necessary at the time as well as whatever agreement has been agreed upon with that particular car accident settlement.
The purpose of gap insurance is to close the "gap" between what your car's worth and what you owe on it. So, for example if your car was worth $15K but owed $18K then the gap would be $3000 - that means that this type of coverage will cover up to a certain amount (in this case, $3000) which in turn ensures there are no surprises when it comes time to settle with the insurer at hand.
While not required by law, many drivers purchase gap insurance because they don't want to have an unknown out-of-pocket cost hanging over their heads should something go wrong; as such, before purchasing any new vehicle make sure you're familiar with all aspects of financing or leasing a car and what it could actually cost you if you are involved in an accident.
Bottom line, while gap insurance may not be a requirement for your car it's always worth considering because you never know what might happen, and the loss of value after an accident can be extreme.
There are many reasons that drivers purchase this type of coverage: to protect their credit score when they total the vehicle or if they're financing and leasing the new vehicle; these steps can help avoid costly surprises should an accident occur in which the driver is at fault. Additionally, some states require consumers to have personal injury protection with property damage liability minimums (in other words, comprehensive) so those who live there need to get both types of coverage on any cars they buy.
If you plan to sell your car after a car accident it's important to write down any issues about the performance of your car so potential buyers know what needs fixing. If the car still has cosmetic damage from the accident, you can rest assured that the right type of buyer will be looking at it, and you won't need to feel guilty tricking someone into buying a damaged car.
Like the age of your car, it will become more difficult to sell over time and may ultimately end up sitting in a parking lot or your garage. You would be surprised to find out the true value of your car and how many buyers want inexpensive cars in decent shape even with an accident record. This means that you may be able to get rid of your car quickly after an accident and avoid any long term headaches and repair costs.