You were in a serious accident and your car was damaged. It has been repaired, but it is no longer as valuable as it once was. Can you recover compensation for the difference between the resale value of your car before the accident and after it?

Unfortunately, many insurance companies do not cover diminution of value and may even specifically exclude it.

If, however, a third party caused the accident, then the third party may be responsible for the diminution in the car’s value. To recover compensation after such an accident, you must submit a claim against the third party’s insurance company. You may be able to recover compensation for the difference between the reasonable market value before the accident and the market value after the accident.

Why can’t you recover compensation for diminished value through a first-party claim?

The answer is that insurance policies generally do not allow for this coverage. Instead, insurance covers the cost of repairs to restore the car to its previous condition. This is in contrast to a third-party claim, which is based on negligence / tort law. Under tort law, a party can recover the difference between the value before the accident and the value after the accident. In other words: the total diminution.

As to be expected, insurance companies are quick to say that repairs are enough to make a car as valuable as it was before a car accident. It is true that Kelley Blue Book does not compare vehicles with accident records to those that have not been in an accident, but many people will not purchase a vehicle that has been in an accident for the Blue Book price.

If you have questions about what your insurance company will cover after a car accident, take the time to speak with a personal injury lawyer.

Source: OLR Research Report, “Insurance Claim for Car’s Diminished Resale Value,” Janet L. Kaminski, Jan. 3, 2007.

Please email me or call  (203) 259-5251 if you  have any questions about a car accident in Connecticut.

 

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