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Car accidents can have serious consequences. Besides endangering the lives of drivers, passengers, and other people, these events often cause extensive damage to vehicles.
Many people rush to get their once-pristine vehicle repaired after this occurs. After all, it was an important investment, and everyone wants their cars to always look like new.
However, those involved in a car crash should evaluate whether it's worth fixing a damaged vehicle after experiencing this accident.
What Should People Consider Before Getting a Damaged Car Repaired?
To know if it's worth fixing a car that has been damaged in a crash, it's important to estimate its diminished value. This term describes the difference in the market price for a vehicle before and after the accident.
The value of a car may be reduced if it has a significant damage history, even if optimal repairs with the original manufacturer's replacement parts have been performed.
More often than not, vehicles are worth less after a crash because their history will show that they've been in an accident and undergone repairs. However, there's no guarantee that hidden structural damage won't surface after a few months or years or that replacement parts will be of high quality.
If the owner decides to resell or trade one vehicle for another, that damage history will reduce the amount they can get for it. This decrease in market price is known as diminished value, which is different from depreciation (a drop in a car's value over time).
Missouri Diminished Value Laws
Under Missouri laws, people involved in a car accident are entitled to compensation for the difference in a vehicle's market value before and after repairs. This remuneration may cover any of the following:
Car repair costs, according to the estimate issued by an auto body shop
Loss of use
Diminished value
However, it's important to understand that diminished value may or may not be recoverable in a car accident claim depending on the relationship between injured people and the insurance company.
In Missouri, insurers aren't required to pay compensation for diminished value if a person files a claim under their own policy. However, insurance companies can offer this type of coverage.
If the claim is filed under someone else's insurance policy because the accident was caused by another party, the car's diminished value could be considered recoverable damage.
Calculating the Diminished Value of a Car
Below are the steps to calculate a vehicle's diminished value:
#1 Determine the Value of a Vehicle
In Missouri, insurance companies must pay the fair market value of a vehicle damaged in an accident. If the insurance agent makes a settlement offer that seems unfair, it's the claimant's responsibility to prove that their vehicle is worth more than that.
Different organizations offer reliable information on vehicles' values, such as the National Automobile Dealers Association (NADA). Their websites can provide people with details and tools to determine how much a car is worth.
The value of a vehicle is based on the following factors:
Make
Model
Year
Overall condition
Trim
Features
Engine
Color
Wheel type
Mileage
An insurance provider can adjust that value based on pre-existing damage or physical wear and tear. Plus, these companies can apply "betterment," claiming that the work done on the vehicle should be considered an improvement because it'll increase the car's price. This is possible if they determine that replacement parts are better or the vehicle requires more than just repairs.
Many car owners check the value of their vehicles frequently, especially those who are proud of their investments. However, understanding this variable becomes crucial when someone wants to determine if it's worth considering repairs or if cutting losses and buying a new one is a better option.
#2 Calculate the Base Loss of Value
Most insurance companies apply a 10% cap known as the "base loss of value" to the amount estimated by NADA. That means a vehicle's diminished value is limited to 10% of the organization's appraisal.
#3 Apply the Damage Multiplier
After calculating the base loss of value, this sum is adjusted by applying a damage multiplier. Insurance companies multiply that amount by a number between 0.00 and 1.00, resulting in an adjusted figure based on the extent of damage determined by the insurer.
This multiplier varies if the cars either suffered structural damage or required panel replacement as follows:
0.00 if there's no structural damage or replaced panels
0.25 if there's minor damage to the structure and panels
0.50 if there's moderate damage to the structure and panels
0.75 if there's major damage to the structure and panels
1.00 if there's severe structural damage
#4 Apply a Mileage Multiplier
Car insurance companies adjust the value a second time by applying a multiplier that will reflect the car's mileage, considering the following:
0.00: 1000,000 miles and over
0.20 = 80,000 – 99,999 miles
0.40 = 60,000 – 79,999 miles
0.60 = 40,000 – 59,999 miles
0.80 = 20,000 – 39,999 miles
1.00 = 0 - 19,999 miles
Filing a Diminished Value Claim in Missouri
People should consider the condition of the vehicle and whether they're fully or partially responsible for the accident before filing a diminished value claim.
If someone wants to prove a car's diminished value, they should calculate it using NADA. Owners can also contact a licensed and competent expert. Insurance companies are often willing to offer higher amounts when claimants get appraisals from third parties.
After that, vehicle owners only have to submit the required documentation and begin negotiations to settle the claim. A St Louis auto accident law firm can help navigate this.
Can a Diminished Value Claim Be Denied?
Insurance companies often deny claims if vehicles:
Are too old
Sustained too much structural damages
Have too much mileage
Were damaged in accidents caused by claimants
Are declared a total loss
What Is Considered a Total Loss in Missouri?
Vehicles are considered a "total loss" when the cost of repairs exceeds their value. In these cases, insurance companies may offer compensation for the full actual cash value of the car.
Although it may seem easy to predict whether an accident resulted in a total loss, car owners won't officially know if an insurance company agrees until an adjuster inspects the vehicle.
Each state has different laws, but this process is similar in most. Insurance companies calculate the total loss ratio, determining how much money it'll cost to repair the car divided by its value before the damage.
In Missouri, a vehicle is considered a total loss when the repair cost plus the salvage value, which is the car's worth in its damaged state, is 80% or more than its actual cash value.
Final Thoughts: Is It Worth Repairing a Vehicle After an Accident?
To sum up, car owners can make a total loss or diminished value claim to recover compensation for their vehicles if they were damaged in an accident. However, it's crucial to determine their value and the cost of repairs to choose the best option.
Sometimes, repairing the damaged car and filing a diminished value claim is worth it because buying a new one is usually expensive. However, vehicles that suffer severe structural damage can be declared total losses, so it's best to take legal action to hold the at-fault party accountable and pursue full compensation.
In other words, to determine whether repairing a car after an accident is worth it, owners should contact an expert, get an appraisal, and learn as much as possible about its value.
Contact A Missouri Personal Injury Attorney
Repairing a car can be expensive, but so is buying a new one. Therefore, those who have had their vehicles damaged in an accident should consider several factors and seek help from an expert to know if it's worth fixing. They can also help with how to avoid insurance increase after accident.
At Powell Law Firm, vehicle owners can get the legal counsel they need to make a smart decision. Our lawyers will always act in the best interest of our clients and fight on their behalf to obtain the compensation they deserve. Contact us today!