There’s a lot of confusion surrounding the concept of diminished value. In simple terms, diminished value is the difference between a car’s pre-accident value and its post-accident value. But what does that mean in practical terms? And how do you go about getting compensated for it? Read on to find out.
Collision Safety Consultants can help you recover what you are owed after a collision. Our team of certified appraisers can easily handle claims for the diminished value of Oklahoma vehicles.
What is diminished value?
Diminished value is the difference between the pre-accident value and the post-accident value of a car. When a vehicle is damaged in an accident, caused by both visible damage and hidden damage (including frame damage, structural damage, and mechanical damage). Diminished value can also be caused by repairs that are not performed correctly or using inferior materials. Many people believe that diminished value only applies to vehicles that have been in a collision, but any type of damage can potentially affect a vehicle’s value.
Diminished value can affect the resale value, which most automobile owners keep in mind throughout their ownership experience. Additionally, it’s good to know about this topic because it can affect the amount of money an insurance company will pay for a totaled vehicle.
What is depreciation?
Depreciation is the loss in value of an asset (in this case, a vehicle) over time. Like any other object, a car will gradually lose its value as it gets older and is used more. Depreciation is normal and should be expected (we’ve all heard the classic “20% depreciation off-the-lot” saying), but there are ways to minimize its effects.
Depreciation is typically higher in the first few years of a vehicle’s life, so it’s often best to wait a few years before buying a new car. You can also keep your vehicle in good condition by regularly servicing it and keeping up with repairs. Well-maintained vehicles will hold their value better than one that isn’t looked after. Depreciation is an inevitable part of owning a car, but understanding it can help you make the best decisions for your investment.
What is the difference between diminished value and depreciation?
The critical difference between diminished value and depreciation is that depreciation is a natural and expected process that happens over time, while diminished value is an abnormal decrease in value resulting from an accident or damage. All cars depreciate, but not all vehicles experience diminished value.
Many individuals confuse the two terms because they are both used to describe a decrease in value. However, it’s essential to understand the distinction to assess the value of your vehicle accurately. We’re here to help you navigate the nuances between depreciation and diminished value. Keep on reading for more.
How to calculate diminished value
There are many ways to calculate the diminished value, but here’s what you’ll always need to do:
Check your car’s value.
First, you’ll want to estimate the vehicle’s pre-accident value from a reputable source such as the Kelley Blue Book since it will be challenging to know how much its value has diminished without knowing your car’s worth.
Apply a 10% cap to the value
The 17c formula takes the car’s retail value from step one and multiplies it by .10 to produce the “base loss of value.” Unfortunately, there is no justification for this gap, and it is usually in the insurance company’s best interest to use it.
Apply a damage multiplier
After an accident, an insurance company usually adjusts your car’s value using a damage multiplier. According to the structural damage done to your vehicle after an accident, the 10% cap value is multiplied by a number ranging from 0.00 to 1.00. The 0.00 multiplier indicates no structural damage or replaced panels, while the 1 indicates severe structural damage caused.
Apply a mileage multiplier
When analyzing the worth of your automobile, NADA and Kelley Blue Book consider the mileage. Still, insurance companies calculate their own mileage deduction when determining value. The adjusted value after applying a damage multiplier is increased by one of these mileage multipliers to determine the final diminished value of the vehicle.
The problems of diminished value appraisal
Diminished value appraisals are widely known to be problematic for a few reasons:
- Appraisers may use different methodologies to calculate the diminished value, so it can be challenging to compare apples to apples. Consistency is difficult to come by, which leads to the second problem.
- There is no standardization in the industry, so some appraisers may be more generous than others. Some will simply inflate the value to help you get more money from the insurance company. In contrast, others will do the opposite and lowball the value to save the insurance company money.
- On the same note, appraisers may have different opinions on what factors should be considered when determining diminished value. One appraiser’s opinion may be worth more than another’s, leading to more inconsistencies. Diminished value can be subjective, so two appraisers may come up with very different numbers.
Because of these problems, diminished value appraisals are often viewed with skepticism. If you’re considering having one done, do your research and find an appraiser (like us) you trust. Let our team of Oklahoma-based certified appraisers help you with your diminished value claim.
When to file a diminished value claim?
This is a question we get a lot here at Collision Safety Consultants. Diminished value claims are tricky, and many insurance companies will try to lowball you or deny your claim altogether. That’s why it’s essential to know when to file a diminished value claim. If you wait too long, the statute of limitations will expire, and you’ll lose your chance to get compensated. In most states, you have two years from the accident to file a diminished value claim. However, it’s best to act as quickly as possible after the accident. This will give you the highest likelihood of success and ensure that you receive the total compensation you’re entitled to.
How do I know if I can file a diminished value claim?
Here are four factors to consider to determine if you’re eligible for a diminished value claim:
- Where you live: diminished value claims are only available in some states, like Oklahoma.
- Your insurance company: not all insurance companies offer diminished value claims, so check your insurance policy to verify if you can submit a diminished value claim.
- Your car’s pre-accident value: the higher your car’s pre-accident value, the more money you may be able to get from a diminished value claim.
- Who was at fault: if you were not at fault for the accident, you might be more likely to get a diminished value claim from the other driver’s insurance company.
How to file a diminished value claim
To file a diminished value claim with Collision Safety Consultants of Oklahoma, follow these steps:
- Call Collision Safety Consultants of Oklahoma to schedule a diminished value review appointment. Or, you can submit a contact form here to have one of our trusted team members reach out to you directly.
- Bring your vehicle, insurance information, and police report (if available) to your appointment.
- An experienced diminished value appraiser will inspect your vehicle and create a report detailing the diminished value of your car.
- Collision Safety Consultants of Oklahoma will then negotiate with the insurance company on your behalf to get you the compensation you deserve.
How to Get the Most Money Out of Your Diminished Value Claim
Everyone going through a diminished claim process wants to know how they can get the most money out of their claim. Here are some things to keep in mind:
- Hire an Experienced Appraiser: The first step is to hire an experienced, certified diminished value appraiser. At Collision Safety Consultants of Oklahoma, all appraisers are certified by the International Association of Certified Auto Appraisers (IACAA). We have over 25 years of experience appraising vehicles in Oklahoma, so we know how to get you the most money possible.
- Know Your Car’s Value: It’s imperative to understand your car’s value before beginning the claims process. This will help you know what to expect and give you a baseline to compare the appraiser’s report to. You can use online resources like Kelly Blue Book or NADA to get an idea of your car’s value.
- Get Multiple Appraisals if necessary: Once you receive the diminished value report from your appraiser, take some time to review it. If you have any questions or concerns, get a second opinion. This will help ensure that you’re getting the most accurate information and being fairly compensated.
- Be Persistent: The insurance company may try to lowball you or delay the process in hopes that you’ll give up. Be persistent and push for the compensation you deserve, and, if necessary, hire an attorney to help you through the process.
- Know Your Rights: Filing a diminished value claim can be complicated, so you need to know your rights. In Oklahoma, you have up to two years from the date of the accident to file a claim. If you have any questions about your rights or need help filing a claim, contact Collision Safety Consultants of Oklahoma today.
Are Insurance Companies Required to Pay a Diminished Value Claim?
In many states, insurance companies are required by law to pay diminished value claims. However, in Oklahoma, there is no such law. This means that insurance companies are not legally obligated to pay diminished value claims, but this doesn’t necessarily mean they will never pay such a claim. Many insurance companies will choose to pay diminished value claims if they feel it is in their best interests. For example, if an insured individual has a high-end vehicle, the insurance company may choose to pay a diminished value claim to keep the individual as a customer. Ultimately, whether or not an insurance company will pay a diminished value claim is up to the company itself.
Does Oklahoma offer any protection against diminished value claims?
Oklahoma is one of many states that have laws specifically addressing diminished value claims. Under Oklahoma law, an insurance company must consider diminished value when settling a claim or lawsuit related to an accident. However, there are a few important exceptions to this rule. First, the insurance company is only required to consider diminished value if the damage to the car exceeds a certain percentage of the car’s value. Second, the insurance company is only required to consider diminished value if the repairs are being made by a licensed repair facility. Finally, the insurance company is only required to consider diminished value if the repairs are made within a specific time frame after the accident.
Are there other ways to get compensated for losses suffered from an accident?
Diminished value is not the only way to get compensated for losses suffered from an accident, as you may also be able to get compensated for your reduced quality of life, your pain and suffering, and your lost wages. You may also be able to get compensated for your medical bills, your property damage, and your legal fees. If you have been in an accident, you should speak to an experienced personal injury lawyer to determine what compensation you may be entitled to and leave the diminished value claims process to professionals like our team here at Collision Safety Consultants of Oklahoma.
Don’t Get Depreciation and Diminished Value Confused
Diminished value and depreciation are often confused, but they are two very different concepts. At Collision Safety Consultants of Oklahoma, we want to make sure you understand the difference to get the most out of your car insurance policy. We offer free consultations so that we can review your specific case and help guide you in the right direction.