What Is Diminished Value Law?

Posted in Car Accidents on June 25, 2019

After a collision, the value of a car reduces below what it was originally worth. Even after repairing the vehicle, the fact that it was involved in a collision at all lowers its market value if the owner wanted to sell it. The state of Louisiana recognizes this diminished value associated with cars that have been in accidents and entitles car owners to receive the difference in this lowered value via compensation.

Types of Diminished Value

Three instances qualify a vehicle for diminished value:

• Immediate diminished value refers to the overall sale-price of a vehicle before and after an accident. This assumes that the owner has not repaired the car.

• Inherent diminished value refers to a vehicle that the owner has repaired back into its original state. Repaired cars do qualify for diminished value compensation, but the car’s owner will typically receive less compensation because the repairs increased the car’s value back to a certain point.

• Repair-related diminished value refers to non-function-related damages that reduce the value of a car. These are a direct result of the repair process. For instance, a car owner might take their car to a third-party shop to get repaired. If the repair shop uses generic car parts, or even paints the repaired parts the wrong color, the car will qualify for repair-related diminished value.

Statute of Limitations

Louisiana honors diminished value claims, but only within a specific timeframe following an accident. A statute of limitations establishes time restraints on various legal processes. In Louisiana, the court allows for no more than one year to pass between the date of the car accident and the claim’s filing date.

Filing a Diminished Value Claim

Insurance companies handle diminished value claims. They are responsible for approving or denying claims based on the details and evidence of each case. Insurance companies are more likely to approve a diminished value claim in accidents that you are not at fault for causing. In Louisiana, your case needs to meet several criteria to be considered a valid case:

• Your vehicle sustained damage but is not a total loss. This implies that it is still functional or capable of handling repair.
• Third-party negligence – not your own – cause the accident.
• You can prove your vehicle’s reduced market value was as direct result of the damages caused by the accident.

Diminished value claims are additional claims that you can file for after pursuing other modes of compensation to address the damage itself. These claims are not meant to repair your vehicle, but to address the lost value associated with the accident.

Factors That Impact Diminished Value Claim Compensation

Because every car and car-accident situation is different, no set average for what the final compensation figure should come out to be exists. However, the following factors always play in significant role in determining your compensation:

• Your car’s value before the accident
• Your car’s current resale value
• Your car’s current mileage
• The number of accidents your car has been in
• Whether your car is considered a luxury vehicle

When to Involve an Attorney

Insurance companies do not give out compensation without thorough evidence and reasoning. An experienced New Orleans accident attorney will help you collect the necessary evidence and calculate a proper diminished value settlement. Oftentimes, insurance companies have their own formulas for calculating this figure, but they are not always fair. Consult an attorney to ensure that you are receiving fair, research-backed compensation to account for the diminished value of your vehicle.

File a diminished value claim to recover the difference in your car’s value after a collision. Though you can file without additional help, consulting an attorney will ensure that your compensation accurately reflects the reduced value that your car suffered from the accident.