Shattered glasses, blinding smoke, blaring honks.
Before you even step outside of your car, you take a quick peep through the dash mirror, only to see the car that hit you from the back is engulfed in smoke.
You can’t tell whether the lightheadedness you feel is due to the collision or the how-could-this-happen thoughts racing in your mind.
But, one thing is for sure – the car accident will depreciate your car’s worth.
Therefore, it’ll impossible to resale or refinance your car at a reasonable price even if it’s repaired and shows no sign of damage.
As such it’s important to understand how to calculate the diminishing value in order to get the exact price your car is worth after the accident.
Read on to find out.
1. Understand the State’s Law
Some states may allow you to file a diminishing value claim against your own insurer, while others against the other driver’s insurer. In some cases, some laws don’t recognize either of these claims.
So, if you’re planning to seek compensation from an insurer, it’s best to first do research on the laws of your state regarding diminishing value claims.
2. Determine Your Car’s Pre-Accident Value
When calculating the diminishing value of your car you need to first factor in the car’s value before the accident. This gives you the starting point from which you can trace your way to the exact price of your damaged car.
You can simply do this by inputting your car’s detail in NADA online calculator to get an estimate of your car. This service is free to use.
3. Apply a 10 Percent Cap
The 10 percent cap, also known as the base loss of value, is the largest amount that can be lost as diminishing value.
Your car’s pre-accident value is multiplied with the base loss value (10 percent) to obtain the cost of the loss through the accident and repair.
Keep in mind that while some insurers may choose to include the 10 percent in their calculation, others may completely ignore it.
4. Use the Damage Multiplier
Usually, the insurance or car-dealership assessing your car after the accident will rate the damage from 0 to 1, depending on the severity of the damage.
0 represents almost negligible damage, while 1 represents extreme structural damage.
This number is then multiplied by the base loss of value to estimate your car’s value.
5. Apply the Mileage Multiplier
The damage adjusted value is further multiplied by the car’s mileage value. The values depend on the total mileage covered by your car.
They’re as follows:
1.0 : 0-19,999 miles
0.8 : 20,000-39,999 miles
0.6 : 40,000-59,999 miles
0.4 : 60,000-79,999 miles
0.2 : 80,000-99,999 miles
0.0 : 100,000+ miles
This system will ensure that a new car (which most probably has less mileage) holds more value than an older car.
Know Your Car’s Worth After a Car Accident!
Understanding the diminishing value of your car is the first step towards fair compensation by the insurer.
For more good estimates, be sure to check in with a car dealer or local mechanic after the accident. What’s more, if your car has had top-notch auto body repair, its worth may significantly increase.
If you need high-quality auto body repair after a car accident, don’t hesitate to contact us at Limerick Auto Body.