When Diminished Value Is & Isn’t Covered By Insurance

Finding out that your car has lost value after an accident – even though you’ve gotten it fixed – can be a low blow. This is especially true if you planned on selling it or if your vehicle was a collectors item that was worth a lot. In the past, drivers had to “eat” the difference between the pre- and post-accident values of their vehicles, known as diminished value, but now you can file a claim with your insurance company for compensation.

Here’s a look at when depreciated value claims may be covered by insurance and when they might not be, and what you can do after a car accident to increase the chances that your claim is covered and paid out at the maximum amount.

Comparing Coverage For Diminished Value

Prior to 2022, no insurance company in Massachusetts had to pay for diminished value. They only had to pay for damages directly resulting from the accident in terms of repairs. But when the Supreme Judicial Court ruled in favor of our client in McGilloway vs. Safety Insurance Company, a new precedent was set. Now, carriers are required to reimburse insured drivers for the diminished value of their vehicles after an accident on covered claims.

To be eligible to file a loss of value claim, the accident must have:

• Been the fault of someone else. In most cases, you won’t be able to file a diminished value claim for your own vehicle if you caused the accident yourself, even if you have full coverage. You’ll need to file the claim with the at-fault driver’s insurance, unless you’re filing with your own uninsured/underinsured motorist policy.
• Occurred a vehicle that you own. You can’t file for lost value of a car or truck that isn’t in your name or that you don’t own, including rented or leased vehicles.
• Involved a vehicle without prior damage. Usually, cars that have been in an accident before are low enough in value that there’s really no disparity between the worth of the car before the last accident and after.
• Resulted in fixable damage. Vehicles that have a salvage title or are declared totaled usually aren’t eligible for diminished value claims since the cars can’t be repaired or resold. Your car must be able to be restored to good or like-new condition to get a depreciated value settlement.

Other Reasons Your Insurance Company Might Deny Your Depreciated Value Claim

Unfortunately, insurance companies aren’t out to protect you. They may make it seem like they are, but that’s really just good marketing. Above all, insurers want to make a profit, and they can’t do that if they’re paying every single claim their covered drivers file. This means many insurance adjusters are trained to find things wrong with claims so they can be denied and the insurance company doesn’t have to pay those settlements.

Some of the most common reasons car accident and diminished value claims are denied include:

• You waited too long to file. You won’t be able to file a depreciated value claim in Massachusetts after the statute of limitations has expired. Even if you file before the expiry date, if you waited any length of time, the insurance company may try to use this against you.
• The vehicle wasn’t covered. Your claim will be denied if the car you’re filing for isn’t listed on your policy or otherwise isn’t covered, like if your insurance lapsed.
• You provided false information. If you misrepresented any part of your claim and the insurance company finds out, your claim will be denied – even if you would otherwise qualify.
• You had some fault in the accident. If both you and the other driver were at fault for the collision, your diminished value claim could be denied or reduced based on your percentage of shared fault.
• The insurer is acting in bad faith. In some cases, an insurance company will deny a driver’s claim in bad faith, meaning they had no legitimate reason to do so. If this happens, you’ll need to appeal the decision, which can take a lot of time and money.

When To Call An Experienced Massachusetts Damaged Car Attorney

If you were involved in a car accident and your vehicle lost resale value as a result, our veteran Salem, MA diminished value lawyers can help. Contact us for more information about inherent diminished value claims or to schedule a time to speak with one of our experienced damaged car accident attorneys. Dial 978-744-8000 or fill out our quick online form and our legal team will get back to you to answer your questions.