Car crashes are frightening and stressful events. Their aftermath leaves you trying to recover all your losses while confused and uncertain about what you can put in a claim for, and when. In addition to any injuries you may have gotten, your vehicle may be severely damaged and require extensive repairs.
You have the right to file an insurance claim for the damage to your car and file a separate claim for your injuries. This approach may help you if you want to get your car repaired quickly but need to wait for your injuries to heal or reach MMI (maximum medical improvement) before settling your personal injury claim. Our firm always recommends filing your property damage and injury claims separately, because insurance companies often try to pressure injury victims to settle for less than they need or deserve for their medical bills because they know victims are anxious to get their vehicle repaired as soon as possible.
Make sure to contact a lawyer before signing any settlement agreement to make sure your injury claim isn’t being lumped in with your vehicle repair claim.
After an accident, you will naturally want your car repaired. The insurance company will take care of those costs. However, the cost of repair is not your only financial loss from the accident, even when there are no injuries to deal with.
Even though once your car has been repaired, its value has decreased because it was in an accident. A history of damage will be disclosed to any purchaser by agencies such as Carfax, and buyers may be more wary of purchasing it or won’t offer as much money because they may think it’s less safe to drive even after being repaired. You will need to make a “diminished value” claim to recover this financial loss after a crash that wasn’t your fault.
The calculation most commonly used by insurance companies is known as the 17c Diminished Value Formula. This formula was created by the settled class action suit in State Farm Mut. Auto.Ins. v. Mabry. The case involved over 25,000 class action claimants seeking insurance payments for the decreased value of their vehicles even after repair.
The Court found that the insurance company was liable, under the insurance policies’ terms, to pay the claimants for the diminished value. The Mabry case set the standard for diminished value claims.
Here’s how it works:
- Calculate the value of the car: Using the calculator on either the NADA or Kelley Blue Book websites, input your car’s details such as the extent of the damage, year, model, make, and mileage. This gives you an estimated sales value for your car.
- Adjust that amount by 10%: Insurance companies normally apply a base loss of value fixed at 10%. Typically, this is the highest amount the insurance company will pay for your car’s loss of value.
- Calculate the damage multiplier: The extent of damage to your car will determine what multiplier to use. The multiplier can range from 0.00 for little damage to 1.00 for serious structural damage. The 10% figure is multiplied by the appropriate damage multiplier.
- Calculate the mileage multiplier: The insurance companies have their own method of calculating the mileage deduction for your car. The multiplier goes from 0.00 for 100,000+ miles, to 1.00 for cars with less than 20,000 miles on the clock.
To put it all together, you first take the estimated value and multiply it by 10%. You then apply the damage and mileage multipliers.
For example, if your car’s value was $20,000 with moderate damage and mileage of 25,000 miles, the amount of your diminished value claim would be:
- $20,000 x 0.10 = $2,000, which gives you the maximum diminished value of the car
- $2,000 x 0.50 = $1,000, which gives you the value of the claim adjusted for damage
- $1,000 x 0.80 = $800, which gives you the value of your claim adjusted for mileage
0.50 is the modifier for moderate damage, while 0.80 is the mileage modifier for 20,000 to 29,999 miles.
Therefore, the insurance company will likely agree to pay $800 for the dimished value to your car. It’s critical to have a lawyer look over the offer you receive from your insurance company to ensure you are receivign a fair offer that includes the diminished value as well as the cost of repairs.
Filing a diminished value claim is not a simple matter. You must remember the burden is on you to prove your car’s decrease in value. You will also have to ensure you complete all the insurance company’s forms correctly or they may have a right to deny your diminished value claim.
If you’ve been injured in an accident, our Syracuse car accident lawyers can help you get the full compensation you’re owed, including for your medical bills, property damage, and diminished value claim. Call Catalano Law today to arrange a free, confidential consultation.