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How Much Value Does a Car Accident Take Off a Car in Trade?

Accidents are unfortunate. Luckily, most Americans have (in some states they are required to have) some insurance to cover the costs of repairs. But, what happens when you go to a dealer to trade in your car a year later, and your car is worth way less than you thought?

Accidents are unfortunate. Luckily, most Americans have (in some states they are required to have) some insurance to cover the costs of repairs. But, what happens when you go to a dealer to trade in your car a year later, and your car is worth way less than you thought?

It might be because it was in an accident in the previous year, and the car has what’s called a diminished value. You were supposedly “made whole” by the insurance company at the time of the accident, but now you realize that you’re out hundreds or thousands of dollars.

How much value exactly did your car lose because of the accident? And can you do anything about it? We’re covering these crucial questions in today’s post.

How much value does a car lose after an accident?

When trading in your car, the dealer will look at the carfax report that shows the car’s history including any accidents. Even if the vehicle is in fantastic shape and no evidence of damage shows, your car will be worthless because it was in a crash.

Have you been injured in an accident?

Contact Bart Durham

 

How to Find Out Your Car's Value After an Accident

Look up the pre-accident value and subtract a percentage.

First, look up your car’s value using NADA or Kelley Blue Book. You’ll need details about your car like make and model, mileage, condition, etc. to get an accurate number. Then, subtract 33% from that value to get a diminished value. For example, if your car was worth $12,000 before the accident, it might be worth as little as $8,040 (12,000 x .33 = $3,960, $12,000 - $3,960 = $8,040) after the accident. If the damage was not structural, you could use 20-25% as a factor to determine diminished value.

See if you can find several similar cars that HAVE been in an accident and use those numbers as a benchmark. Showing these cars to the insurance company will help your case.

Calculate Using Insurance Companies Methods

Naturally, insurance companies want to pay you as little as possible. When determining diminished value, they use a method called the 17c method. You can find a detailed explanation here, but we’ll cover the basic idea.

First, they start with the Kelley Blue Book value. Then, they subtract 10%. Yes, only 10%! This is the maximum they will give you for diminished value. But it gets worse. Then, they subtract more for mileage, and more for the amount of damage. Let’s look at how this plays out in the numbers. 

Let’s say your car is worth $12,000 before the accident. Your vehicle had minor damage, and it had low mileage.

  • $12,000 - 10% ($1,200) = $10,800

This represents the MOST they will give you for diminished value.

  • $1,200 - 25% ($300) = $900

They subtract another 25% because the damage was only minor.

  • $900 - 20% ($180) = $720

They subtract 20% because of the low mileage. They subtract more as the mileage goes up.

So, now you’re left with $720. This is very different than the $3,960 that we calculated. Is there anything consumers can do about this difference?

What can you do about the lost car value?

There is a light at the end of this tunnel. If the accident was not your fault, and the insurance of the other driver is paying the claim, you CAN file a diminished value claim. Be prepared that most insurance companies will say “no.” But ask again, and show them that you have a case by doing your research. Note that you cannot file a claim until you have actually suffered the financial loss, meaning you cannot make a claim until you trade in your car.

Insurance companies don’t want to pay out these claims, but we encourage you to do your research and hold them accountable!

If you or a loved one has been injured, we’re here to help. Your first consultation is FREE.

Schedule Your Free Consultation

 



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