Car accidents have a lot of effects that you have to deal with. If you were fortunate in that you only suffered mild injuries or no injuries, you might still have vehicle damage to contend with. Getting your repairs taken care of can be expensive, but that should all be paid for by the defendant’s car insurance. However, that might not be the end of your claims if your car ends up worth less money even after the repairs.
A diminished value claim pays you for the difference in value after the repairs are completed on your car. Simply by having been in an accident, your car is often worth less, and even with repairs and replaced parts, the vehicle could have a lower value than it started with. That decreased value is something you can account for as part of a car accident claim in Maryland.
Call our Maryland car accident attorneys at Rice, Murtha & Psoras for a free case review by dialing (410) 694-7291.
What is a Diminished Value Claim for Vehicle Damage in Maryland?
When your car is involved in an accident, it goes down in value. In a car accident claim, the plaintiff (the victim) files for damages to cover any of the expenses and harms that they faced because of the defendant (the at-fault driver’s) mistakes on the road. This can include a wide variety of harms, including medical bills, lost wages, vehicle damage, pain and suffering, and even this diminished value, all with the goal of setting things back to how they were before the crash.
In many cases, a damaged vehicle can be repaired in such a way that it is functionally as good as it was before the crash. In this case, the only thing the defendant will have to pay for is those repairs. That might mean covering the cost of parts, labor, paint, and other materials and expenses. However, repairs might not be perfect, and even if they are, the car will often be worth less than it was simply because it was involved in a crash.
A diminished value claim lets you account for this and get reimbursed for the reduction in value, sometimes called a “diminution” in value.
Why Are Cars That Were Involved in a Crash Diminished in Value?
If a car is in an accident, people will be less interested in buying it. Even when repairs are perfect, it is hard to know what damage might be underneath the repaired body and a new coat of paint, so buyers typically just value vehicles at a lower price if they were involved in a crash.
Carfax and other history reports always include information about previous accidents, and buyers and dealers take that into account when putting a value on a vehicle. So, even if the accident wasn’t your fault, your car is likely going to be worth less after the crash, even if it has been repaired.
Calculating a Diminished Value Claim for a Car Accident in Maryland
Knowing how much a car is worth is often difficult, and many people just trust dealerships to have a better idea of their car’s value. However, it is important to look into how much your car’s diminished value claim could be worth, which inevitably means looking into how much your car should be worth before and after the accident.
The diminished value claim itself will be for the difference in value between what your car was worth and what it is now worth after the crash. This value is ultimately added on top of other costs, like the cost of repairs and labor.
One of the main calculation methods used to find this value is known as the “17c” formula, named after an insurance form. Here’s how you use that calculation method:
Original Value
To calculate this “diminution in value,” you have to start with the original value of your car before the accident. That means looking at the Kelley Blue Book or a similar valuation manual to determine the value of your car based on the specific make, model, year, features, mileage, and other details. When looking at this value, use the condition your car was in before the accident.
From there, we take 10% (multiply that original value by 0.10). Essentially, we start by assuming your car’s value dropped 10% at the maximum, and then we adjust that down based on the damage your car suffered and the mileage on your car.
Once you have that 10% starting value, we need to choose a “damage modifier” and a “mileage modifier.”
Damage Modifier
A damage modifier of 1.00 indicates very severe damage to the structure of the car and would keep you up at the maximum 10% diminution in value by multiplying that number by 1. Typically, this value is set in intervals of 0.25, with something like 0.50 being “moderate” and 0.00 being no damage at all.
Multiply your original 10% by this multiplier to get your diminished value so far.
Mileage Multiplier
The original value of your car should have already taken mileage into account, but it is a common practice to take it into account again at this stage. The assumption here is that when an old, heavily used car gets damaged, it doesn’t affect the price as much as when a brand-new, low-mileage car is damaged.
The multiplier for mileage starts at 1.00 for a car with under 20,000 miles, and the multiplier drops by 0.20 for every 20,000 additional miles. So, for example, a car with around 20,000 to 40,000 miles on it will use a multiplier of 0.80.
Once you multiply your total so far by this second multiplier, you will get the total estimated diminished value to include in your claim.
Alternative Method
While that calculation is what insurance companies often use, lawyers and courts might be more straightforward. If you want to know the diminished value, you can simply check the value of the vehicle before the crash and after the crash by looking at its Kelley Blue Book value, then just subtracting the two.
Car values take into account the damage done in a crash, so you can just subtract the new post-crash value from the old pre-crash value and use that number as an estimate for how much to claim. This also accounts for cases where the car’s value is reduced by more than 10%, something that the 17c calculation ignores or assumes can’t happen.
Call Our Maryland Car Accident Attorneys for Help
If you were involved in a crash, call Rice, Murtha & Psoras at (410) 694-7291 for a free case review with our Baltimore accident lawyers.