Visible damage tends to get the most attention when you’re the victim of an automobile accident. It’s easy to focus on the dents, scratches, and other destruction that requires a skilled automotive body technician to restore your vehicle to its pre-accident condition.
A property damage lawyer knows there’s a subtle yet significant factor that impacts the true value of your vehicle, even after repairs are made – diminished value.
This blog explores the hidden costs of diminished value, answering the following questions:
- What is diminished value and why does it matter?
- How is diminished value calculated?
- What is the role of appraisers in determining diminished value?
- How do you address diminished value in your property damage claim?
- How does a property damage lawyer negotiate with insurance companies?
What is diminished value and why does it matter?
Diminished value refers to the reduction in the market value of a vehicle after an accident that requires significant repairs. Even if the restoration is meticulous and leaves the vehicle looking as good as new, the stigma associated with its accident history can cause a lower perceived value during resale or trade-in.
Here are 4 reasons why diminished value matters.
- Market Perception
Potential buyers often hesitate to pay the same price for a vehicle that has been in an accident. Even if the repairs are expertly executed, there is a perceived loss in market attractiveness. - Resale Value
Diminished value directly impacts the resale value of your car or truck. When you decide to trade in or sell your vehicle, you’ll receive offers that are lower than expected once buyers see the CARFAX report detailing its accident history. - Insurance Compensation Discrepancy
Insurance companies compensate for the cost of repairs, but they don’t automatically account for the diminished value. Understanding and pursuing compensation for diminished value is a crucial part of being fully reimbursed for the impact on your vehicle’s overall value. - Future Insurability
A vehicle with significantly diminished value may be considered higher risk by insurers. This could cause your insurance premiums to increase. In some extreme cases, it may be difficult to secure comprehensive coverage.
How is diminished value calculated?
In New Mexico, diminished value is influenced by several factors. Working with a property damage lawyer with experience and expertise can ensure you calculate your vehicle’s diminished value correctly when pursuing damages against the at-fault party.
Common approaches used in New Mexico include the 17c Formula developed by the insurance industry. Another option is the Actual Cash Value Formula (ACV) which considers factors like the vehicle’s pre-accident value, mileage, and the kind of repairs needed.
What is the role of appraisers in determining diminished value?
Hiring a qualified appraiser is often essential in the diminished value calculation process. Appraisers consider several factors, including the extent of the damage, the specific features of the vehicle, and the quality of the repairs.
Some of the key roles of an appraiser include:
- Assessing market perception of your damaged vehicle that considers concerns about safety, reliability, and the overall desirability of the repaired automobile.
- Comparing with pre-accident conditions to determine the completeness of repairs, alignment issues, and any other discrepancies between the before and after model.
- Evaluating the repairs including workmanship, replacement part types, and whether the repairs meet industry standards.
Your property damage lawyer can use the appraiser’s written report to support negotiations or as an exhibit if your case ends up in court.
How do you address diminished value in your property damage claim?
Addressing diminished value in your property damage claim involves several steps. The first is to thoroughly document the accident. Your property damage lawyer can help with this process.
You’ll want to collect witness statements, take photographs of the accident scene and the damage to your vehicle, and obtain the police report. Comprehensive documentation strengthens your overall claim, including the diminished value component.
Other ways you can address diminished value in your property damage claim include:
- Consult with an appraiser who specializes in diminished value and can generate a report that can prove valuable during negotiations.
- Notify your insurance company about the accident and your intent to file a diminished value claim.
- Obtain quality repairs from a reputable body shop that specializes in restoring vehicles to their pre-accident condition.
How does a property damage lawyer negotiate with insurance companies?
A property damage lawyer relies on their knowledge of New Mexico property damage laws to negotiate with the at-fault party’s insurance company. This is an important part of the claims process.
With determination and skill, your attorney can get the at-fault party’s insurance company to agree to a fair settlement that includes diminished property value.
Most attorneys take the following approach when negotiating:
- Compiling relevant documentation to support your claim.
- Crafting a demand letter outlining the damages that include property damage and diminished value and sending it to the opposing party’s insurance company.
- Providing an assessment of damages to the insurance company for their review.
- Responding to the insurance adjuster’s assessments with counterarguments if necessary.
Shining a light on diminished value
Navigating the complexities of a property damage claim that considers diminished value is challenging. You can increase your chances of receiving fair compensation by working with an experienced property damage lawyer familiar with New Mexico property damage laws.
Don’t get victimized twice. Give us a call to shine a light on diminished value.