After an accident, a car is worth less than it was before the accident happened. This is true even if your car has been repaired perfectly. The value of your car after an accident is based on its “fair market value,” or what you could sell it for, in your area, in its current condition.
It’s not always easy to determine the value of a car. The insurance company may rely on appraisers or its own internal formulas to calculate your car’s value. It’s important to know that you are entitled to be compensated for any loss of your car’s value as a result of the accident. This is separate from your insurance claim to repair the damage.
What is the “diminished value” of my car?
When a car is in an accident, the accident damage will show up on your car’s title report. In the future, anyone interested in buying the car can get a copy of the report through services like Carfax.com, and they will see how seriously the car was damaged in the accident. People in general are wary of buying cars that have been in accidents, and they usually won’t pay as much money for them, even if the damage has been fully repaired.
This means that as a practical matter, your repaired car is worth less than it was before the accident ever happened. The difference between your car’s value pre-accident and its value after repairs is known as the “diminished value.” You have a right to recover the diminished value from the insurance company, but you will have to ask for it. Insurance companies like to avoid paying out claims, and they probably won’t tell you that you can make a claim for the diminished value. You can make a diminished value claim even if you don’t have any plans to sell your car.
What if my car was totaled?
If your car was totaled, your rights are a little different. In Georgia, an insurance company will declare a car totaled if the value of the car before the accident is less than the cost to repair it plus its salvage value. For example, suppose your car was worth $10,000 before the accident, repairs will cost $9000, and the junkyard would pay $1500 for it. The repair cost ($9000) plus the salvage value ($1500) equals $10,500. Since the car was only worth $10,000 before the accident, it will be totaled.
If your car is totaled, the insurance company will pay you the value of your car before the accident, minus any deductible you have to pay. If you want to keep your car, the insurance will give you the value of the car before the accident, minus the salvage value and any deductible. Your car will be worth whatever its salvage value is.
How do insurance companies decide what my car is worth?
Insurance companies use appraisers to assess your car’s value and the cost to repair it. They also use their own resources, formulas and calculations. Every insurance company is different, and there aren’t many hard and fast rules.
For calculating diminished values, many insurance companies use a formula. Not surprisingly, they like this formula because it leads to a relatively low diminished value, minimizing the amount of money the insurance company has to pay you. However, the state of Georgia does not have any laws or rules requiring them to use this formula—or any other one. This means that, armed with your own evidence of the car’s value before and after the accident, you may be able to negotiate for more money.
If you were injured in the accident, you can get help from a car accident attorney near Atlanta. An attorney understands how insurance companies work and can help you get the best value possible for your car. More importantly, a lawyer can help you recover money to pay your medical bills, make up for lost pay, and potentially get you additional large damage awards.
Talk to an Atlanta Car Accident Lawyer for Free
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