Should You Seek Compensation For Diminished Value After A Car Accident?

23 July 2019
 Categories: Insurance, Blog

If you have auto insurance on your car and end up in a collision, your policy will likely pay the damages as long as you have collision coverage. While you may never expect to be in this position, this is one of the main reasons you need auto insurance coverage. When this happens, though, you might want to consider requesting compensation to cover the diminished value of your car. If you have never heard of this, here are a few important things to know about it.

The definition

Diminished value is a term you will usually only see after an accident takes place. In addition, it is only used when a car is fixed after an accident takes place. What this term refers to is the reduced value of a vehicle after repairs are made to a wrecked car. When a car is fixed after a wreck, it automatically loses some value, as the car is no longer worth the same amount it was before the accident and repairs were made.

For example, if you have a car that is currently worth $10,000 and then you wreck it and get it repaired, this car might only be worth $8,000 after the repairs are made to it, even if the car looks exactly the same as it did before the accident. This is what diminished value is.

When you can seek compensation for this

You can seek compensation for diminished value after an accident takes place where you choose to get your car repaired. This could be an accident that you cause or an accident someone else causes. If you cause it, you would have to seek compensation for diminished value from your insurance company. If someone else caused it, you could seek compensation from that person's insurance company.

Why you should consider asking for compensation

While you do not have to ask to be compensated for diminished value, you should consider it if you suspect that your car is now worth less. Keep in mind, people will research a car before buying it to find out if it was in an accident. If it was, they may not be willing to pay as much for the car, even if there is no obvious damage or problems with the car.

Auto insurance comes in all types and sizes, but it will generally cover the cost of diminished value if you carry collision coverage. If you would like to change your policy or get a new policy, contact an insurance agency that offers auto insurance coverage