Diminished Value
A CRUCIAL STEP WHEN buying a preowned car is to scrutinize its Carfax report. A single-owner car with a regular maintenance history and which was driven solely for personal use should be a safe bet, while an accident record gives most people pause. All things being equal, a car that was in an accident, however minor, ought to cost less than a similar one with a clean history.
Some bargain hunters don���t mind taking a chance on a car with an accident history as long as it drives well. After all, the discount can be quite attractive. This might seem unfair for a seller who wasn���t at fault for the accident. Even if the car was repaired to perfection and the tab was picked by the other party���s insurance, how does the owner recover the value lost? A recent accident forced us to find out the answer.
We flew across the country to spend the Labor Day week with my brother-in-law. While driving us around in his almost-new car, he was rear-ended by a pickup truck. Thankfully, no one was hurt, and the car was still drivable. The pickup���s apologetic driver accepted fault and assured us that his insurance would cover all repairs. Still, we worried about the car���s market value.
It turns out that my brother-in-law can recoup some of the loss through a diminished��value claim. First, he needs to get a fair estimate of the loss of market value due to the accident. This might involve researching prices of similar used cars with and without an accident history, or even getting a free estimate.
Next, he must contact the other driver���s insurance company and specifically request diminished value compensation. This amount would be on top of the repair and rental costs. The claim should be made in a timely manner and backed by the necessary documentation.
The insurance company will likely reduce the compensation amount. For example, if the pre-accident value of a low-mileage car that suffered severe damage was $25,000, the insurance company might cough up $2,500 at most. It���d likely be far less if the damage is moderate or the car has higher mileage. Paying a few hundred dollars for a written estimate from a licensed appraiser may increase the odds of fair compensation.
Some bargain hunters don���t mind taking a chance on a car with an accident history as long as it drives well. After all, the discount can be quite attractive. This might seem unfair for a seller who wasn���t at fault for the accident. Even if the car was repaired to perfection and the tab was picked by the other party���s insurance, how does the owner recover the value lost? A recent accident forced us to find out the answer.
We flew across the country to spend the Labor Day week with my brother-in-law. While driving us around in his almost-new car, he was rear-ended by a pickup truck. Thankfully, no one was hurt, and the car was still drivable. The pickup���s apologetic driver accepted fault and assured us that his insurance would cover all repairs. Still, we worried about the car���s market value.
It turns out that my brother-in-law can recoup some of the loss through a diminished��value claim. First, he needs to get a fair estimate of the loss of market value due to the accident. This might involve researching prices of similar used cars with and without an accident history, or even getting a free estimate.
Next, he must contact the other driver���s insurance company and specifically request diminished value compensation. This amount would be on top of the repair and rental costs. The claim should be made in a timely manner and backed by the necessary documentation.
The insurance company will likely reduce the compensation amount. For example, if the pre-accident value of a low-mileage car that suffered severe damage was $25,000, the insurance company might cough up $2,500 at most. It���d likely be far less if the damage is moderate or the car has higher mileage. Paying a few hundred dollars for a written estimate from a licensed appraiser may increase the odds of fair compensation.
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