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Diminished Value: The Secret the Insurance Industry Doesn’t Want You to Know

Imagine that you are driving safely and suddenly a negligent driver rear-ends your vehicle. Even if you are lucky enough to escape the accident without any bodily injury, you likely have damage to your vehicle. You arrange the necessary repairs and file a claim with the insurance company who covers the repair expenses and your deductible. You weren’t at fault in the accident but at least now you have been fully compensated for the damage to your vehicle, right?

Let’s say that your car was worth $25,000 on the day of the accident and the necessary repairs cost $5,000. After the repairs are completed your car is still worth $25,000, right? Unfortunately, the answer is oftentimes no. Even if the body shop does an excellent job and your vehicle looks just as good as it did prior to the accident, your car is actually worth less, sometimes considerably less. A car that has been involved in a collision, no matter how well repaired, inherently loses resale value.

This concept is often referred to as diminished value. Diminished Value is the loss in market value that occurs when a vehicle is involved in a collision and repaired. A reasonably intelligent consumer will never pay the same price for a vehicle that has been involved in a collision as compared to one with no prior accident history. Even when the repairs are performed to the highest standard, the vehicle will inevitably lose value. Most sophisticated consumers use services such as carafax.com to research the accident history of vehicles prior to making a purchase. I’m sure you can picture the cute fox in the television advertisements prompting the seller to, “Show me the CARFAX!”

Insurance companies are well aware of the concept of diminished value but will rarely tell you. Instead, the insurance company cuts a check for the cost of repairs and as far as most people know they’ve been made whole. It’s only later when people try to sell their vehicle that they realize the decrease in value caused by the accident. Often, a vehicle with frame or other structural damage cannot be sold as a “certified used vehicle”. This can decrease a vehicle’s resale value by up to 40%.

The good news is that under Florida law, if you were not at fault in the accident, the at-fault party’s insurance company is liable to you for the diminished value of your vehicle after the accident. Also, there is no need to worry if you’ve already settled your property damage claim with the insurance company – you can still request to be compensated for the diminished value of your vehicle.

It is important to remember that insurance adjusters can be difficult to deal with. Their job after all, is to settle each claim for the lowest amount possible or deny it altogether. With that in mind, be prepared for the insurance company to fight your claim for diminished value. Some insurers will go as far as to tell you that there is no such thing as diminished value, or may also tell you that the diminished value is some lesser amount they calculated.

For those who are unable to recoup their diminished value claim, turning to the courts is an option. However, depending on the amount of the claim, the cost of an attorney doesn’t make sense. For example, a car worth less than $10,000 probably isn’t worth hiring an attorney for. An expensive or newer car, however, could definitely be worth hiring an attorney to file a claim, as thousands of dollars could be at stake.

Consult with an experienced Florida Attorney to help you determine your legal rights and recourse. Sibley Dolman Gipe Accident Injury Lawyers, PA has a reputation for representing victims throughout the state of Florida and will never represent an insurance company. We are available to answer your most pressing questions by phone, 727-451-6900.

https://www.dolmanlaw.com/practice-area/insurance-bad-faith/