Diminished Value of a Car – What Should You Know?
If your car is involved in an accident and incurs a heavy damage, you first have to know that the insurance provider – yours or the opposite party’s – will place a dollar value on your car. It is this value depending on which the insurance company will decide whether to pay you an amount to get your car repaired or declare it a “total loss” and pay you “actual cash value”. You may wonder how the insurance company comes to this value. Can the diminished value be claimed and if it’s so, how it is connected to “actual cash value”? Experts at http://hansenprice.com/understanding-diminished-value/ share their knowledge on this subject here.
How to Determine the Value of Your Car?
It’s only a car accident that makes you realize the difference between what you (and most car owners) think about your car’s worth and what your insurance company thinks about it. It’s often a wide difference.
While finding the value of your car, the insurance company does an effort of coming as near as it can to the resale price of your car if it weren’t caught in an accident. They usually use Kelly Blue Book and Edmunds to find this value, by comparing your car to one:
- Of the cars of the same model, make and year as of yours
- Of the cars in similar condition as of yours
- Having the same factory-added choices
- In the same geographical location
When the insurance company shows the value they have found, don’t hesitate to ask them how they came to it. The valuation is a crucial point of any car damage claim following an accident.
Diminished Value Claim Against Actual Cash Value
Many car owners get confused between these two terms. So, it’s important to know the difference.
Diminished Value Claims: ‘Diminished Value’ indicates an obvious fact that a after a serious accident, the value of a car automatically lessens which makes it difficult to sell. Most buyers will not want to buy cars that have undergone accidents, in part also because of potential future issues. It’s the courtesy of companies like Carfax that make buyers get the information of used cars with the help of Vehicle Identification Number, like reported accidents the vehicle has gone through. In many states, it’s compulsory for owners to unveil the accident history to prospective buyers.
Actual Cash Value: If in an accident your car gets very heavily damaged, the insurance company will proclaim it a “total loss” and rather than paying you to get the car repaired, they will pay you the ‘actual cash value’. They usually do this if the cost of repair is more than the cost of replacing the car or if the damage is so heavy that they are compelled to designate the car as a “total loss”.
In case of actual cash value too, if you aren’t satisfied with the value, you can ask the company how they arrive at it and ask for the supporting documentation and can provide any evidence supporting your own valuation of the car to the adjuster.
Remember that if you have a car loan, the insurance company is not obligated to pay the loan.
HansenPrice.com are Diminished Value Specialists. So, you can learn much more on this topic by visiting their website.