People are involved in car accidents every day through no fault of their own. Usually the costs of repairs to the vehicle are promptly taken care of by the wrong doer’s auto insurance company and no more questions are asked. But what about the reduction of your car’s value as a result of being involved in the accident? Most people and their attorneys do not even consider making a claim for the “diminished value” of their vehicle. “Diminished Value” is the loss of value as a result of your vehicle being damaged in an accident and subsequently repaired. It has been shown that a vehicle involved in a car accident is valued at an estimated 33% (or 1/3) less than what it was before the accident even if it has been fully repaired.1 What this means is that even if your vehicle is fully repaired, and the insurance company pays for those repairs, you are still losing money in the long run (when you try to trade in your vehicle or sell it). So can you be reimbursed for the “diminished value” of your vehicle?
Well, often the answer is NO! The reason being that the client has usually accepted repairs and signed a release preventing further claims before he/she hires a lawyer. However, if the injured party comes to an attorney early (before completing repairs) this can be avoided.
In Indiana it has long been recognized that “tort law” seeks to make the wronged person whole. In the case of a car accident, if you are suing the driver of another car who is at fault, you would be bringing a “tort claim”. Well, if the basis of “tort law” is to make the wronged person whole then it would make sense to reimburse them for the diminished value of their vehicle as well as repairs. It just so happens that the Indiana Court of Appeals agrees with this view. In Weiss-GMC, Inc., Court of Appeals stated that when a party’s property is damaged by a tort-feasor, but not completely destroyed they may recover the cost of repairs, plus the reasonable reduction in fair market value as a result of the damage from the tort-feasor.2
Claiming diminished value can become complicated when insurance companies are involved. In the 2005 case, Allgood3 the court recognized a claim for diminished value but said according to the insured’s “collision” coverage (Allgood was repairing vehicle her vehicle using her own policy) the insurance company was not liable for the diminished value. In another 2005 case, Dunn4 the award was granted because the claim was governed by tort law due to the contract language in the “uninsured motorist” coverage of the insured (In Dunn the repairs were being paid under the uninsured motorist property damage provision).
Whether recovery is proper for diminished value of an automobile involved in an accident depends a lot on the language of the insurance policy and whether you are making a claim against your insurance company. On the other hand if the claim is made against the wrongdoer and his/her policy, the policy language is irrelevant. Because of the complexities in these cases it is important to seek the services of an experienced accident attorney, and of course see him/her before signing a “release” from further claims/damages. Not only can an experienced attorney help you recover to pay for your injuries (whiplash, concussion, or others), they can also help you recover the repair costs and diminished value of the vehicle.
2 Wiese-GMC, Inc., v. Wells, 626 N.E.2d 595 (Ind. Ct. App. 1993)
3 Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243 (Ind. 2005)
4 Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005)