Diminished Value Claims

How Do Diminished Value Claims Work?

Once you buy a brand new car, its value decreases as soon as you drive it off the lot.

If your car is in an accident, however, its value will drop even more — even after insurance pays to repair it and make it as good as new.

No matter how great your repaired car looks and runs, it is worth much less compared to a new car that has never been in an accident. That’s where a diminished value claim can help make up the difference.

Our team of attorneys at Whitener Law Firm explains how diminished value claims work below. For further help from a skilled car accident lawyer in New Mexico, call our Albuquerque office at (505) 883-7877 to schedule a free consultation or fill out an online form.

What does “diminished value” mean?

Diminished value, also called diminution of value, is the difference in what your vehicle was worth before and after an accident. Even after repairs have fixed the damage, your car’s value will still be lower than it was prior to the accident.

Diminished value is not the same as depreciation, which is the steady drop in your car’s value over time.

A diminished value claim can help you recover the difference between your car’s pre-accident value and its post-accident value. How much you can recover varies from a few hundred dollars to thousands of dollars. Each claim is unique.

Types of diminished value claims

There are two types of diminished value claims. The type you file depends on when you file your claim.

Inherent diminished value

This claim can be filed after you get your vehicle repaired. It’s meant to compensate you for “stigma damage,” or a car’s loss of appeal compared to an identical car with no damage.

Repair-related diminished value

This claim can be filed if the person or company repairing your car fails to restore it to its state before the accident, or does a poor job restoring it. It helps to cover the loss in value from a bad repair job.

How do I know I have a diminished value claim?

It’s generally easy to decide whether to file a claim with insurance following your car accident. If you have collision insurance, comprehensive insurance, or uninsured/underinsured motorist insurance, you know that you should file a claim.

Diminished value claims, however, aren’t always so easy to figure out. There are certain factors that may affect your decision to file a diminished value claim.

Your insurance policy

Check your insurance company policy because it may have specific rules about diminished value claims. Make sure to read the fine print of your policy where it may be hidden.

Where you live

In all states except Michigan, the insurance company of the at-fault driver is responsible for repairing your car and paying for diminished value. If the at-fault driver does not have insurance, the language of your insurance policy will determine whether you can make a diminished value claim against your own insurance.

What varies by state can include statute of limitations, how the value of your car is calculated, who can file the claim, and the amount of financial compensation.

Your car

Your car’s age, mileage, or pre-accident value can affect what you recover from a diminished value claim. If it’s an older vehicle or has a lot of miles on it, your car may not be worth paying your claim to an insurance company.

Who was at-fault

If you’re at-fault for the accident, your chances of filing a successful diminished value claim aren’t so high. Standard auto insurance policies usually exclude coverage for diminished value if you’re responsible for the accident.

How do I file a diminished value claim in New Mexico?

To file a diminished value claim, you’ll follow these general steps.

  1. Determine your car’s pre-accident value. Use a site like Kelly Blue Book to find out the value of your car before the accident. You can also get a professional appraisal for your vehicle, which can serve as proof to the insurance company for your claim.
  1. Check state laws. The statute of limitations on diminished value claims in New Mexico is 4 years from the date of the accident. You can also be an uninsured motorist when filing a claim; however, you can’t be at-fault for the accident and still file.
  1. Let the other insurer know that you’re filing a claim. Then, you’ll send a letter to the at-fault driver’s insurer to let them know you’re filing a diminished value claim. They’ll likely ask you questions and verify some information before proceeding.
  1. Wait for their decision. The other party’s insurance company will likely have your vehicle inspected to check its condition. They’ll also use the 17c formula to calculate a diminished value for your vehicle. The insurer can approve or deny your claim.

Should I hire an attorney for my diminished value claim?

You’re not legally required to have a lawyer to file a diminished value claim, but an attorney can help you get the results — and financial compensation — you deserve for your damaged vehicle. A lawyer can also help you fight against a denied claim and take it to court, if needed.

If you’re looking to recover your losses from a car accident that wasn’t your fault, let the Whitener Law Firm help. Our team is well-versed in diminished value claims and can help you get back the lost value of your car. Call (505) 883-7877 to schedule a free consultation at our Albuquerque office, or fill out a contact form online. You can also follow the Whitener Law Firm Facebook page.

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