What Is Diminished Value?
Motor vehicles represent significant financial investments that should be secured through prudent loss control measures. Even the most diligent, experienced and responsible drivers may eventually be involved in accidents. A slight tire slip or momentary lapse in attention may be all that’s necessary to put your vehicle at risk, and without adequate insurance, your financial losses could be devastating. Furthermore, even if you are not at fault for an accident, you may accrue losses, such as through diminished value.
Understanding Diminished Value
Diminished value refers to how the assessed value of your car may be impacted after an accident. Even if you can fully repair or restore your vehicle to its condition before an incident, the need for repairs may negatively impact its value. Potential buyers may be less willing to pay as much for a vehicle if they are aware that it has previously been damaged.
Diminished value should not be confused with depreciated value, which refers to how your car’s vehicle may decrease over time regardless of accidents or other damage.
How Do Diminished Value Claims Work?
Standard auto insurance policies generally do not include coverage for diminished value if you were at fault for an accident. However, you may be able to recoup such losses if another driver was responsible for the damage to your vehicle. Even if you have collision coverage, your insurance can typically only pay for repairs while not providing any compensation for resulting diminished value.
If you do have the opportunity to submit a claim against a third-party’s insurance for diminished value, you should do so as soon as possible following the accident in question. This may help you avoid any issues with states’ statutes of limitations and make it easier to provide supporting documentation.
These claims are typically submitted against the at-fault driver’s insurance, as they are responsible for recouping your losses, including the diminished value of your vehicle. If another driver is responsible for your losses and lacks auto insurance, your ability to file a diminished value claim may depend on if your own policy includes uninsured or underinsured motorist coverage.
Your agent can help you understand your specific auto insurance policy, including whether you can submit diminished value claims and under what circumstances.
Get the Right Coverage
At Select Insurance, our dedicated staff has extensive experience providing ideal auto coverage for motorists in Anderson, Greenville and Spartanburg. We will work with you to help you understand diminished value and other components of the auto insurance claims process. Contact us today to get started.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.