How Much Will a Car Accident Devalue My Vehicle?

Whether minor or major, car accidents can be stressful. Even after repairs, your car might not be worth as much as it was before the accident. This is called “diminished value,” and it can affect you if you want to trade in or sell your car in the future.

What is diminished value?

Diminished value is the reduction in a vehicle’s market value after it has been in an accident, even if your car has been fully repaired. This happens because most buyers are hesitant to pay full price for a vehicle with a history of accidents.

There are generally three types of diminished value:

• Inherent diminished value is the most common type. It refers to the vehicle’s loss in value because the car now has an accident history, even if it was repaired properly.
• Repair-related diminished value happens when the repairs aren’t performed correctly or cheaper materials are used, lowering the car’s value.
• Immediate diminished value happens right after the accident before any repairs are made.

Inherent diminished value can affect the car’s resale or trade-in value.

How much value does my car lose after an accident?

There’s no universal formula to determine the exact amount of diminished value. Here are a few key issues that can affect how much value your vehicle loses after a car accident:

• A minor fender-bender might not significantly affect your car’s value, but a major collision likely will. If structural damage occurred to the car or the airbags deployed, potential buyers or dealerships will view your car as a higher risk, even if it’s fully repaired.
• Newer cars with lower mileage tend to lose more value after an accident because new cars are expected to be pristine. Older vehicles, or those with pre-existing wear and tear, may not lose as much value because buyers typically expect some imperfections.
• Luxury and high-end vehicles often lose more value after an accident than a standard or economy car. This is because buyers in this type of market usually have high expectations for quality and condition.
• If the repairs are performed by a reputable shop using manufacturer-approved parts, the car retains more value than if cheap parts or poor workmanship were
• Services like CARFAX or AutoCheck keep a detailed history of accidents and repairs for most vehicles. Once an accident is listed on one of these reports, it can’t be removed. Potential buyers may view it as a red flag.

How do I calculate the diminished value of my vehicle?

The state of Massachusetts doesn’t have a specific law or formula for calculating diminished value, but insurance companies often use what’s called the 17c formula, or some variation of it. Here’s how it works.

• Determine your car’s pre-accident value. You can do this by using resources like Kelley Blue Book (KBB) or the National Automobile Dealers Association (NADA) guide.
• Most insurers apply a percentage (typically 10%) to your car’s pre-accident value to estimate the maximum diminished value. For example, if your vehicle was worth $20,000, the maximum diminished value would be $2,000.
• Next, the insurer applies a multiplier based on the severity of the damage. These multipliers are:
  • 0 for severe structural damage
  • 5 for major damage and repairs
  • 25 for minor damage
  • 00 for no structural damage or cosmetic issues only
• Finally, the insurer applies a mileage multiplier:
  • 0 for cars with 0 to 19,999 miles
  • 8 for 20,000 to 39,999 miles
  • 6 for 40,000 to 59,999 miles
  • 4 for 60,000 to 79,999 miles
  • 2 for 80,000 to 99,999 miles
  • 0 for 100,000+ miles

Here’s an example. If your $20,000 vehicle has moderate damage (0.5 multiplier) and has 50,000 miles (0.6 multiplier), its diminished value would be $20,000 x 10% x 0.5 x 0.6 = $600.

Who pays for diminished value in Massachusetts?

Here in Massachusetts, we follow a no-fault insurance system, which means that your own insurance pays for things like medical expenses and lost wages, no matter who caused the accident. However, when it comes to property damage – including diminished value – the at-fault driver’s insurance is responsible.

If another driver caused your car accident, you can file a claim with their insurance company to recover the diminished value of your car. However, keep the following in mind. Massachusetts drivers are required to carry property damage liability insurance with a minimum limit of $5,000. If the at-fault driver has insufficient coverage, you may not be fully compensated. If the at-fault driver is uninsured, you may need to rely on your own uninsured motorist property damage coverage if your policy includes it. Our Massachusetts car accident attorneys can help explain this.

How do I file a diminished value claim?

To file a diminished value claim in Massachusetts, follow these steps:

• Start by collecting evidence. You will want a copy of the accident report, photos of your car before and after the accident, repair invoices and estimates, and your car’s market value from sources like KBB or NADA.
• Consider hiring a diminished value appraiser who can offer an expert opinion on how much value your car has lost. This report can strengthen your claim and counter low offers from insurance companies.
• File your diminished value claim with the at-fault driver’s insurance. Be prepared to have to negotiate – insurers often undervalue claims.
• If the insurance company denies your claim or offers an unfair settlement, the Massachusetts car accident attorneys at the Law Offices of Gerald J. Noonan can help you fight for fair compensation.

How can your Massachusetts car accident attorneys help with my diminished value claim?

Diminished value claims can make a big difference in recovering the full costs of your car accident. Our experienced attorneys can help by:

• Assessing your car’s diminished value and determining if filing a claim is worth pursuing.
• Insurance companies are notorious for offering low settlements. We negotiate on your behalf to secure the compensation to which you’re entitled.
• If negotiations fail and a fair settlement can’t be reached, we will take your case to court to hold the at-fault party accountable for your damages and losses.

How can I protect my car’s value after an accident?

It’s true that you can’t completely avoid any diminished value of your vehicle, but these steps can help minimize it.

• Choose a repair shop with certified technicians and a good reputation. Quality repairs can make all the difference in how your car is perceived.
• Keep detailed records of the accident, repairs to your vehicle, and any appraisals. This documentation can help support your claim.
• Act quickly. The longer you wait to file a diminished value claim, the harder it can be to prove your case.

Have you been in a car accident in Massachusetts and are worried about how it will affect your vehicle’s value? At the Law Offices of Gerald J. Noonan, we have the experience and dedication to help you recover the compensation you deserve for your vehicle’s diminished value claim. We can handle all the legal aspects of your claim while you focus on getting back on the road with confidence. Call our offices or fill out our contact form to get started.