What is “Diminished Value”?
The accident history of a car involved in a collision significantly decreases its value and often presents safety issues. This decreased value is called “Diminished Value,” and occurs because most people won’t buy a vehicle that has been in an accident without a significant price discount. Diminished Value is the difference between the market value of a car prior to a collision and its reduced value following an accident and subsequent repair.
How is Diminished Value calculated?
If a vehicle has lost value due to an accident the owner is entitled to (1) the difference between its value before the accident and its lesser value after repairs and (2) the reasonable cost of repairs. However, the total amount recovered cannot exceed the vehicle’s value before the accident occurred.
How do I prove how much my vehicle has lost in value?
If you’ve already sold your car, the decreased sales price is proof of the loss. If you still own the vehicle, it’s necessary to hire a reputable appraiser to access the likely loss in value.
Can I recover Diminished Value for a leased vehicle?
Diminished Value cannot be recovered for a leased vehicle in California unless the leasing company charges you a damage fee due to the accident.
Can I recover Diminished Value from my own insurance company?
Diminished Value cannot be recovered against your own insurance company in California. It can only be recovered against the insurance company of the negligent party who caused the accident.
What is “Loss of Use” and why is it important?
If your vehicle has been damaged or totaled in an accident, you’re entitled to recover Loss of Use damages from the responsible driver’s insurer. Loss of Use claims are often made in conjunction with Diminished Value claims, but can also be pursued separately.
An owner is entitled to recover the Loss of Use of their vehicle from when the vehicle is wrecked until it’s repaired or settled as a total loss. Damages are determined by the reasonable cost to rent a similar vehicle for the amount of time reasonably necessary to repair or replace the vehicle.
How much can you recover for Loss of Use damages?
Damages for Loss of Use can be significant. Most new, luxury or exotic cars, trucks or RV’s rent for hundreds of dollars a day. Repairing these vehicles can take weeks or more to complete. For example, a Ferrari’s comparable rent is about $1,000 per day. If repairs took thirty days to complete, the Ferrari’s Loss of Use would be $30,000.
Insurers often provide lesser quality rental cars as a substitute. Don’t be fooled; unless it’s a comparable rental vehicle, you’re still entitled to Loss of Use less a credit for whatever the insurer paid for the economy rental.