If you have a car in California and it is involved in an accident, that could be more than just a stressful experience. Your vehicle won’t have the market value it had before the accident. Moreover, depending on the severity of the accident, your car might be a complete wreck.
Suppose you were lucky and your car is damaged but still in one piece. Then? Get your vehicle repaired at a professional auto shop? You should do that, but don’t forget to file a diminished value claim in California. In today’s blog, we are discussing what it is, mistakes to avoid when filing a claim, and how to file a diminished value claim the right way. So, let’s start.
Diminished Value Claim
When your car is involved in an accident, its market value immediately drops; this is called a diminished value claim. A vehicle can have 3 types of diminished values. The drop in a car’s market value immediately after an accident is called immediate diminished value. Reduction in the car’s market value after it’s repaired with original parts is called an inherent diminished value.
When the vehicle is repaired with substantial parts, the car’s value further drops. The difference between a car’s market value before and after repair is called repair-related diminished value. A diminished value claim is your right to demand the lost value of your vehicle from the insurance company.
How Insurance Companies View Diminished Value
Insurance companies view diminished value claims with reluctance and try to deny or minimize payouts. For this, they use the following tactics.
Policy Language
Most insurance policies don’t specifically cover inherent diminished value; insurers often point to this and deny claims.
Proof of Loss
Insurers demand concrete proof of loss in the car’s market value; otherwise, they quote diminished value as unrealized loss. An independent appraisal report can help you with it.
Repairs Make Whole
After your car is repaired to its pre-accident condition with quality parts, the insurers argue that the customer has been made whole. Now, there is no significant residual loss.
Info Control and Negotiation
Insurance companies often hide your right to a diminished value claim to control the negotiation process and lower settlement amounts.
Third-Party Claims
Generally, you file a claim against the at-fault party’s insurance company. Still, the at-fault party’s insurer negotiates aggressively.
Claim Complexity
Determining a vehicle's exact diminished value is complex. Insurers know this and use it to dispute the claimant’s valuation and offer lower amounts.
Mistakes When Filing a Diminished Value Claim
Filing a diminished value claim is complicated, no doubt, but claimants often make costly mistakes. These mistakes lead to claims denial or significantly lower payments. We list these mistakes here:
Failing to Get a Professional Appraisal
One of the biggest mistakes is relying on the insurer’s assessment or using generic online calculators. Insurance companies use specific formulas, like the 17C formula, which undervalues the loss. Instead, hire an appraiser and get an accurate appraisal report.
Not Understanding State Laws
Diminished value laws vary by state. Some states have specific rules and regulations that impact your ability to recover the losses. So, you should research laws and file the correct type of claim within the required timeframe.
Submitting Incomplete or Disorganized Documentation
A claim without proper documentation will likely be denied. Gather all relevant paperwork, including the police report, repair estimates, before and after photographs of the damage, the vehicle history report, and the independent appraisal.
Admitting Fault or Talking Too Much
Anything you say to the insurers can be used to minimize your payout. So stick to the facts and communicate in writing to maintain a clear record of all interactions.
Accepting the First Offer
Insurance companies aim to minimize payouts and rarely offer the full diminished value amount upfront. You should not accept the first offer and negotiate using your appraisal report and comparable sales data.
Waiting Too Long to File
Delaying your claim filing can hurt your case. You should file the claim as soon as your vehicle is repaired.
Assuming the Insurer Is on Your Side
Sometimes people think insurers are on their side, but they are not. Insurers are business-focused, so you need to advocate for yourself.
The Right Way of Filing a Diminished Value Claim
The right way to file a diminished value claim is as follows:
Determine the at-fault party.
Check the laws related to diminished value claims.
Get your vehicle from a professional auto shop.
Gather all evidence, including police reports, etc.
Hire an independent appraiser and obtain an appraisal report.
Submit a formal demand letter, including all your documents.
Negotiate with the insurer when they offer a settlement.
If necessary, file a lawsuit and hire an attorney.
We are ADR-Claims, your reliable appraisal company. If your car was involved in an accident, and you are filing a diminished value claim, let us evaluate your vehicle. Based on findings and industry knowledge, we will provide you with a detailed and accurate appraisal report. We will also help you throughout the claim settlement process. Contact us now and book your appraisal.
