When a motor vehicle gets involved in a car accident, it loses some of its economic value. Even if the vehicle is repaired and restored, its resale value will be lower than it was prior to the crash simply because of its accident history. Diminished value is a compensable type of loss that you should be seeking financial compensation for as part of your Las Vegas car accident injury claim.
What Is Diminished Value in a Car Accident Case?
Motor vehicles do not retain the same economic values indefinitely. Instead, market values fluctuate depending on factors such as age, overall condition, mileage, make and model, after-market modifications, popularity, and market demand. One of the factors that can significantly decrease a vehicle’s market value is a car accident. When a vehicle is involved in a collision, its value can take a hit in more ways than one:
- Immediate diminished value due to property damage to the vehicle right after the accident (before repairs).
- Inherent diminished value due to stigma surrounding the vehicle’s crash history (after repairs).
- Repair-related diminished value if there is an issue with repairs, such as aftermarket parts, incomplete repairs or low-quality work.
Diminished value from a car accident persists even after a vehicle is repaired due to the potential for structural damage and reduced performance from crash-related damage. When buyers see the vehicle’s accident history on reports such as Kelley Blue Book and Carfax, this will automatically reduce the value of the car, regardless of whether or not it has been perfectly repaired.
What Is a Diminished Value Claim?
A diminished value claim is an option that vehicle owners in Nevada can use to seek financial compensation for the difference in what a vehicle was worth prior to an accident vs. what it is worth now, after a car accident and repairs. Even if an insurance company pays to repair a victim’s car, the vehicle will never be worth as much as it was before the crash. Vehicle owners may be eligible for financial compensation to make up for this diminution in value.
Nevada’s Diminished Value Laws
Even after a vehicle has undergone high-quality repairs, it will be worth less than a comparable vehicle that has never been involved in a car accident due to stigma alone. Nevada law recognizes this diminished value of a vehicle as a recoverable type of loss in a car insurance claim or personal injury lawsuit, subject to certain restrictions.
Who Pays for Diminished Value?
Nevada is a fault-based car accident state, where the person or party at fault for causing an accident must pay for victims’ losses. This means that you may be entitled to financial compensation from the other driver’s insurance policy for your vehicle’s diminished value in addition to medical bills and property repairs. However, you must prove that the other driver was at fault for your accident.
First-Party Claims Are Not Allowed
In general, drivers cannot collect compensation for diminished vehicle value from their own insurance companies in Nevada. This is known as a first-party insurance claim. Nevada law only allows these claims against another driver’s insurance provider (a third-party claim).
Required Property Damage Liability Insurance
Nevada law only requires $20,000 in property damage liability insurance for motor vehicle drivers. Unfortunately, this is often not enough to fully cover a victim’s property repairs or vehicle replacement after a crash, especially with luxury or sports cars. To receive a higher amount in compensation, the victim may have to file multiple claims or bring a car accident lawsuit.
How to File a Diminished Value Claim in Nevada
A diminished value claim after a car accident in Nevada is filed separately from a general damage claim. It is wise to determine the pre-crash market value of your vehicle on your own, using a resource such as Kelley Blue Book, beforehand to have a number in mind. Then, contact the at-fault driver’s insurance company to learn the exact process for filing. Different insurance companies can have different protocols. Include relevant evidence with your claim, such as photos of the damage or an appraisal from a certified official after the vehicle is repaired.
How Is Diminished Value Calculated?
Whether a car accident was major or minor, both vehicles involved will suffer a reduction in resale value once the crash is reported. Insurance companies calculate diminished value when offering a settlement by analyzing the car’s market value before vs. after the accident. They will generally look at the following factors:
- The extent of the vehicle’s damage
- The quality of repairs and parts used
- The vehicle’s value before the car accident
- The age and mileage of the vehicle
- The make and model of the vehicle
The accepted standard for calculating diminished value is to determine 10 percent of the car’s market value before the accident, then to multiply this percentage by a damage multiplier that ranges from 0.00 to 1.00. Higher multipliers are assigned to vehicles with more severe structural damage. Next, this number is multiplied by a mileage multiplier, also between 0.00 and 1.00, where up to 19,999 miles on the vehicle’s odometer equates to a multiplier of 1.00 and 100,000 miles or more is a multiplier of 0.00. This calculation would give the insurance company the final amount it offers to settle a diminished value claim.
What to Do if an Insurance Company Is Not Offering a Fair Amount in Diminished Value
If the settlement you are offered by an insurance company to resolve your diminished value claim seems low, don’t accept without consulting with a car accident attorney. A lawyer can evaluate the true diminished value of your vehicle without his or her own profits in mind. Having an accurate number can inform your settlement negotiations and help you fight for the amount that you deserve. An attorney can help you prove your vehicle’s market value, which may include special considerations for customizations or aftermarket modifications that the insurance company did not take into account.
Then, your Las Vegas personal injury lawyer can use objective evidence such as professional appraisals to show how much the vehicle’s market value has decreased due to its accident history. While a qualified car accident attorney handles settlement negotiations with an insurance company for you, you can focus your attention on healing from your injuries and rebuilding your life. To discuss a specific diminished value claim with an experienced attorney in Nevada, contact Koch & Brim, LLP to request a free car accident case review.