What is a diminished value calculator and when does it apply to my car accident?

What is a diminished value calculator and when does it apply to my car accident?

A diminished value calculator tells you what an insurance company might pay you based on the difference between what your car was worth before an accident and what it is worth after you have repaired it.

Some states, like North Carolina, might allow you to recover some of the lost value by submitting a claim. A diminished value calculator is a helpful tool but it is only part of the process in filing a claim. In this article, we’ll answer these questions:

How do you calculate diminished value after an accident?

NextAdvisor explains the four basic factors a diminished value calculator includes:

  • The market value of the car from a source like the J.D. Power NADA Guide or Kelley Blue Book
  • A “cap” multiplier (they use 10%) to find out the maximum amount of diminished value possible
  • A “damage multiplier” based on the type of damage (from slight to severe structural damage)
  • A “mileage multiplier” that’s in addition to the market value mileage calculation

You can figure out what damage multiplier to use by getting a written estimate from a third-party appraiser. We’ve provided more about this in the How do I submit a diminished value claim section of this article.

Most insurance companies have their own diminished value calculator. If the other driver is at fault, your insurance agent can help you with this calculation.

 

How do I know if my car wreck is eligible for a diminished value claim?

If you are the person at fault in an accident, your insurance company usually won’t allow you to submit a diminished value claim. That’s because most policies do not cover lost value for the “at fault” driver since they are the one who caused the claim.

Standard auto insurance policies usually do not allow the policy holder to submit a diminished value claim. Your auto insurance agent can usually show you the section that explains your eligibility.

Some insurance companies offer a diminished value “rider”. It is often a separate coverage agreement that’s attached to your main car insurance policy.

Other kinds of insurance policies are sometimes confused with diminished value coverage. You should work directly with your insurance agent to understand the best type of coverage for the vehicle you own.

Is “gap insurance” the same thing as diminished value insurance?

Gap insurance is not diminished value coverage. This kind of insurance protects the policy holder against a loss of value if they’ve financed a vehicle for more than it is worth.

For example, if you trade in a car and roll your remaining loan into your new one, the payoff amount may be more than the value of the vehicle you are purchasing. Without gap insurance, in an accident where the vehicle is totaled, the insurance company will usually pay the fair market value of the car or truck at the time of the accident – not the loan payoff amount. With gap insurance, the insurance company may pay the full amount of your loan value.

Is “stated value” insurance the same thing as diminished value insurance?

Stated value insurance is not diminished value coverage. This kind of insurance protects the policy holder against a loss of appraised value for a unique, classic, or historic vehicle.

For example, if you own a museum quality classic car like a 1970 Mercedes Benz 280SL that’s had a concourse level restoration, your car’s value may be more than the NADA or Kelly Blue Book value. Without stated value insurance, in an accident where the vehicle is damaged or totaled, the insurance company would pay you the fair market value of an old 1970’s Mercedes. With stated value insurance, your insurance company may pay full value of the vehicle with a written, pre-accident appraisal from a qualified appraiser.

 

How do I submit a diminished value claim?

The diminished value claim process may be different based on your insurance policy and the state in which you are making the claim. You should always check with your auto insurance agent about the specific steps you need to take to submit a claim for diminished value.

In most cases, you can only submit a claim after your repairs are completed. If you have not had your car repaired yet, you should read the How can I increase the claim amount from a diminished value calculator section of this article.

The diminished value claim submission process usually has these steps:

  1. Complete all the repairs to your vehicle.
  2. Contact your auto insurance agent for specific instructions.
  3. Locate a qualified third-party appraiser.
  4. Obtain a written trade-in value estimate.
  5. Submit your written estimate to your insurance agent along with all required diminished value claim paperwork.

For a diminished value claim appraisal, we recommend taking your vehicle to a local dealership that matches your vehicle’s brand. For example, if you have a Chevrolet, we recommend taking it the local Chevrolet dealership and asking for a written trade in value estimate. You should not use an appraisal from the same dealership or auto body repair shop that completed the repairs.

Depending on your policy and insurance company, you may be required to contact the other driver’s insurance company and file a claim directly with them. This can become a complex issue. If you decide to go forward with a diminished value claim to another driver’s insurance company, you may need to consider hiring someone to represent you. You should consider the amount of the claim you might receive and the cost of representation as well as the time you have to work on this kind of claim.

 

How can I increase the claim amount from a diminished value calculator?

If you’re a North Carolina resident, you have the legal right to the car repair shop of your choice. We advise our Fuquay-Varina, NC area neighbors to have their vehicle repaired at the shop of their choice rather than the one their insurance company or the other driver’s company suggests.

This is important because the parts and processes the shop uses can increase or decrease the amount of your diminished value claim. For example:

Another driver ran into a 2021 Jeep Grand Cherokee. The Jeep owner was not at fault.

The other driver had a “discount” insurance company who said they would only pay the claim if the Jeep owner took their SUV to a specific repair shop. The Jeep owner did not know this was against the law and had the shop repair the Jeep.

The shop used aftermarket structural and cosmetic parts in the repair because that’s what the discounted policy covered. The Jeep owner submitted a claim to their insurance company. The diminished value calculator reduced the claim value because the Jeep repair included non-Original Equipment Manufacturer (OEM) parts.

In this example, if the Jeep owner had used the shop of their choice and used OEM parts, the diminished value calculator would have resulted in a higher claim value. If your insurance policy does not allow OEM part replacement, you can work with your auto body repair shop to understand your options for OEM replacement parts during an insurance repair.

 

About Automotive Collision Specialists in Fuquay Varina, NC

Automotive Collision Specialists works with most major insurance companies. In North Carolina, you have the right to choose any repair shop – not the one an insurance company requires you to use.

If you’re trying to find a good auto body repair shop near you to help with automotive hail damage repair, please give us a call. We’ve been serving neighbors in and near the local Fuquay-Varina, NC community for more than 25 years.

We’re ASE and I-CAR certified and offer a limited lifetime warranty on all the work we do. Call us today at 919-552-0333 to see how we can help!

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