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Calculating Diminished Value After a Texas Car Accident

Calculating Diminished Value After a Texas Car Accident

Once your car has been involved in an accident, prospective buyers may shy away from purchasing it. In fact, there are services like CarFax that report on prior accidents because it is something that people want to know when buying a used car. The car will drop in value, even if it has been fully repaired after the accident. This drop is something for which you can be compensated in an insurance claim when someone else caused your accident. A Corpus Christi car accident lawyer will review your claim and guide you on how much you can recover in this claim. Then, they would fight for you to receive the maximum possible compensation.

Once your car has been in an accident, its value is permanently reduced, no matter how good the body shop you used is. It does not matter how severe the accident was. Diminished value describes the difference in the value of your car before and after the accident.

Regardless of the quality of work that has been performed on your car, it will never have the same value as it did the day before the accident. Often, this reduction in value could reach thousands of dollars. Some of the reduction in value could be dictated by what happens in the days after your accident. Obviously, your hope is that the repair work will be extensive and sufficient for the car to regain as much of its value as possible. However, insurance companies often stand in the way of sufficient repair through their penny-pinching and difficult ways.

What’s In This Guide:

Types of Diminished Value

There are three primary types of diminished value after a Corpus Christi car accident. You are entitled to receive compensation for them, whether it is from the insurance company or repair shop. Here is how your car can fall in value after an accident:

  • Inherent diminished value – Inherent diminished value is the drop in value that happens because of the perception that your car is not the same as it was before the accident. People tend to think that accidents beget the need for further repairs, even if the car was completely fixed. Your car will never regain this value. An accident history will lower the value of your car when you try to sell it.
  • Instantaneous diminished value – Instantaneous diminished value is the loss in value that happens at the instant in which the collision occurs. The insurance company will have an obligation to pay for repairs and the loss in value to your car.
  • Repair-related diminished value – The insurance company paying for your damages will try to cut corners everywhere possible to save money. They may strip out various line items from a damage estimate. While the insurance company cannot direct you to use a certain body shop or parts, you never quite know what the body shop will do. The repair shop would need to pay you if they were found to have performed substandard work.

Texas Law on Diminished Value

In Texas, insurance companies are required to pay diminished value claims when a third party is negligent and has caused the loss in value. The Texas Department of Insurance directs insurers to make these payments when drivers do not have a contract with them, something that is part of each auto insurance policy written in Texas. This inclusion comes from court rulings in Texas that state that a vehicle is not restored to its pre-accident condition if the repairs still left it short of its value before the crash. The direction does not necessarily come from a written law on the books in Texas but rather from how judges interpret insurance policies.

Texas insurers are not required to pay diminished value claims when the driver caused their own damage, or they are filing a claim against their own insurance. Diminished value is part of the claim that you can make after an accident. If the amount of diminished value exceeds the policy limits, then drivers can make a claim on their own policy as underinsured motorist damages. Diminished value claims will be something that is factored into your damages if you make a claim and your case goes to court.

How to Calculate the Diminished Value

Insurance companies use a complicated formula to calculate diminished value called the 17c formula. The formula comes from a court case in Georgia, and it has become part of the standard operating procedure for insurance companies across the country. However, this formula is not legally binding, and there is nothing that says that it must be used. Insurance companies often take advantage of this formula to cut the amount of money that they pay you.

Factors that are considered in calculating how much money you legally deserve in a diminished value claim include:

  • The age of your vehicle – You will have an easier time recovering for diminished value claims to a newer can than an older one.
  • The mileage of your car – The more miles that you have put on your car, the less likely an accident is to significantly diminish the value of your car.
  • The type of car that you have – Diminished value claims will come into play more often when you are dealing with higher-end cars.
  • The car’s accident history – Previous car accidents reduce the value of a vehicle.

Regardless of the factors above, insurers cannot hide behind complex formulas to avoid paying what they owe. Nonetheless, insurance companies will usually impose a cap of 10% of the sales price of your car for a diminished value claim.

How to File a Claim for Diminished Value in Texas

There are a number of requirements for you to successfully submit a diminished value claim. The first thing is to prove that a third party was to blame for your crash. Then, you would submit a claim to their insurance company. You can only file a claim with your own insurance company if their coverage is not enough to pay for the damages.

You would also need to establish that the value of your car after the repairs is less than it was before the crash. If you are filing a claim with the insurance company, the reason must not be because of shoddy repair work. When filing the claim, you need to come with a specific dollar amount and support it.

Finally, you should prepare and submit a claim that clearly states the basis of the claim and should include evidence that pertains both to liability and the value of your damages. Your claim would state both the facts and the legal basis for your claim and include all of the necessary evidence.

Evidence to Support Your Claim

If you are claiming diminished value, you need proof. Besides the evidence that establishes liability, you may submit the following in support of your diminished value claim:

  • Itemized copies of estimates to fix your car
  • Pictures of the damage to your car
  • Invoices for the repair
  • Estimates of the value of your car before and after the accident from sources such as the Blue Book
  • The police report that shows pictures of your car at the scene of the accident

When preparing your claim, you must be organized and methodical to show the exact damages to which you are entitled. A Corpus Christi auto accident attorney can assemble your claim for you, ensuring that you include every detail and document necessary to get paid for your diminished value claim.

Contact a Car Accident Lawyer in Texas to Discuss Your Options

If you have suffered any type of damages in a Texas car accident, whether they are physical or property, you may be entitled to financial compensation. First, you need to contact an attorney to learn more about your legal options and how best to get paid for your accident damages. The Patel Firm will fight for you to receive top dollar for your car accident claim. We will not let insurance companies push you around and deny you what you deserve. Call us today at (361) 400-2036 or contact us online to schedule your free case evaluation.

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