In Georgia, we have a major advantage over friends who live in other states: if a Georgia resident gets in a car wreck—even if you are at fault and filing a claim under your own collision coverage—insurance will likely have to pay you for the loss in value to your vehicle. Most other states do not require insurance to pay claims for diminished value.
What is Diminished Value?
Diminished value is the decrease in value of your car as a result of damage that it sustained. For example, if you are driving a ten-year-old car that already had several dents and dings, you likely would not suffer much loss in your car’s value after it was wrecked and repaired. However, if you are driving a brand new car, you likely would suffer a big loss in the car’s value after the wreck if you had a lot of property damage. Diminished value is a determination of how much less the vehicle is worth, even if the repairs are excellent in quality.
In 2001, the Georgia Supreme Court decided that insurance companies in Georgia are required to pay diminished value claims as a part of property damage settlements in automobile accidents. Basically, the Court held that, because the vehicle’s reputation was hurt by it being in an accident, it had less value on resale than a vehicle that had never been in an accident. Because the vehicle had less value, the owner suffered a loss, and the insurance had to pay the owner the difference in value after accident and repair, in addition to paying for the repair of the vehicle. State Farm Mut. Auto Ins. Co. v. Mabry, 274 Ga. 498 (2001).
After the Mabry decision, many insurance companies tried to use a formula from that case to determine diminished value. Insurance companies claimed they were legally required to do so by the Georgia Insurance Commissioner. The fact that this particular formula generates a very low diminished value was in the insurance companies’ favor, which, of course, they preferred. The Commissioner responded by issuing an official directive that there is no set formula to be used in Georgia to determine how much a vehicle’s value has diminished because of an accident. Instead, the determination of diminished value has to be made on an individual basis based on a variety of factors, such as the value of a vehicle in the local market and the terms agreed to in the insurance policy.
How do you prove diminished value?
One way to figure out diminished value is to do your own research. You can visit or call around to used car dealerships in your area to see how much they would offer for a vehicle like yours both without accident history and with it. Once you calculate the value difference between an accident-free and a repaired vehicle, you have a number you can present to the insurance company for diminished value.
But, the most effective way to determine how much less your vehicle is worth after an accident is to get a professional, written appraisal. There are companies in Georgia that offer a diminished value appraisal service. If you have a professional, written opinion to provide the insurance company in support of your claim, then you can negotiate with the insurance company (whether it is the at-fault party’s insurance or your own) from a stronger position, making it more likely you will receive the compensation you deserve.
Though insurance companies should be working for their insured, we all know that sometimes we have to fight to get the compensation we are entitled to after an accident. In Georgia, always submit a claim for diminished value of your repaired vehicle after an accident. If you were in a car accident and have questions, give us a call today to see if we can help you get all the compensation the law allows.