In the days and weeks following a Virginia car accident, the victim (the person who believes that they were not at-fault for the crash) will file a claim against the other driver’s insurance for any “damages” caused by the crash.
Then, after an investigation, the insurer will typically compensate the victim for the cost to repair these damages.
However, such settlements will often fail to fully compensate other, often unnoticed effects that an accident can have on your future.
One of the most common unnoticed effects is the sharp depreciation in your vehicle’s value following the crash.
Generally, to recover damages for such a loss in value, you’ll have to file a “diminished value claim” with the other driver’s insurance.
In this article, we’ll quickly summarize Virginia’s rules on diminished value compensation.
We’ll also briefly answer a few common questions people have about diminished value claims.
What is a “Diminished Value” Claim?
As defined in the Virginia Code:
“‘Diminished value compensation’ means the amount of compensation that an insurance company pays to a third party vehicle owner, in addition to the cost of repair, for the reduced value of a vehicle due to damage.”Virginia Code § 46.2-1600
Basically, Virginia law states that even after you finish repairing your car, you can still make a claim to recover damages for the “reduced value” of your vehicle.
Further, this claim for “reduced value” is in addition to the cost to repair the vehicle itself.
As an example, let’s say that you own a car that’s valued at $10,000.
However, through no fault of your own, you’re involved in an accident that results in significant damages that require professional repairs at a mechanic.
Even after repairing your car, it will most likely never have a value as high as $10,000 again.
This is true even if your mechanic fixes everything, down to the most minor of details.
In this example, you could use this loss in value as the basis for a “diminished value claim,” as the insurance company’s settlement offer would likely fail to account for the significant loss in your car’s overall value.
So, if you had to pay $2,000 to repair your car, but, even after repairs, your car was only worth $7,000, you might be able to submit a claim for an additional $1,000 to account for the diminished value.
A Quick Look at Case Law: Averett v. Shircliff
To expand a bit on “the law” of this situation, the 1977 case Averett v. Shircliff, decided by the Virginia Supreme Court, is the most important precedent for diminished value claims in the Commonwealth.
It’s quite short, so we recommend reading it in full if you’re considering a diminished value claim.
To summarize, the “point” of this case is that it sets a general rule for cases involving diminished value claims in Virginia:
“Where the automobile is totally destroyed, the measure of damages is the market value of the automobile as at the time of destruction…”
“Where the automobile is damaged, but not completely destroyed, the measure of damages is basically the difference between market value at the time of the injury and market value after the injury…[after accounting for repair costs].”Averett v. Schircliff, 237 S.E.2d 92, 95 (Va. 1977)
Basically, as stated above, you may make a claim for the difference between your car’s market value at the time of the injury (i.e. before the crash) and its market value after the injury (i.e. after the crash).
In the event that your car is totaled, for example, you could make a claim for the entire pre-crash value of the car.
If, as is the case here, your car is not totaled, you can make a claim for the cost of damages plus the diminished value of your vehicle.
A Quick Diminished Value Claim FAQ
When should I file a diminished value claim? Is it really worth it?
Diminished value claims are usually only worthwhile if the accident produced major damage, or if your car is valuable enough to warrant an appraisal or argument.
Put another way, most fender benders do not necessitate a diminished value claim.
Generally speaking, most diminished value claims will involve (1) older, collectible vehicles, (2) expensive vehicles generally, or (3) vehicles that, due to the nature of the crash, experienced a sharp decline in value.
While there’s certainly nothing stopping you from making a diminished value claim after an accident, you should carefully weigh the pros and cons of such a strategy (preferably with an attorney) before including it in your claim.
What evidence should I collect for my diminished value claim?
In our discussion above, we mentioned that your diminished value claim will be equal to the pre-accident value of your car minus the post-accident value of your car, minus any repairs that were done on the car as a result of the accident.
For this reason, the evidence you collect for your claim should largely focus on proving a set value for any of these three points:
- Pre-Accident Value – While somewhat impractical, appraising your vehicle before an accident is generally a good idea. This is particularly relevant for expensive or collectible vehicles.
- In the absence of an appraisal, evidence that helps prove your vehicle’s pre-accident market value, such as an affidavit from your mechanic or a document that shows the value for comparable undamaged cars, would also be helpful.
- Post-Accident Value – This is usually where an appraiser comes in. Generally, the insurance company will hire an appraiser to do this for you. In some cases, it may be beneficial to hire your own appraiser for a second opinion.
- Additionally, pictures of the damage, affidavits from your mechanic, and other similar evidence can also help you prove a specific post-accident value.
- Cost of Repairs – Make sure to save any bills for repairs done to your car. The advice for this point generally follows the conventions of normal traffic accidents.
At a bare minimum, you should collect (1) photographs of your vehicle before the accident, (2) photographs of your vehicle immediately after the accident, (3) photographs of your vehicle after the repairs are finished, and (4) a signed affidavit or written appraisal, created by a qualified appraiser, that documents your vehicle’s “loss in value.”
How do I file a diminished value claim?
Generally speaking, you should start by notifying the insurance company of your wish to file a diminished value claim in addition to your property damage claim.
The insurance company will then determine the loss in value, and make you an offer based on the difference between your vehicle’s pre- and post-accident worth.
If you wish to contest this offer you should consider speaking with an attorney.
You might also want to hire your own appraiser to get a second opinion on your car’s loss in value.
Note, however, that most minor impacts and fender benders will result in rather low settlement offers, if the insurance company makes an offer at all.
As we mentioned above, diminished value claims are usually only worthwhile in cases where the vehicle itself had a very high value, or if the accident resulted in significant damages without actually totaling your vehicle.
If you think your vehicle is worth an appraisal and a diminished value claim, you should speak with an attorney about the best way to add such a claim to your case.
Remember, no insurance company will voluntarily give you more money if they can help it.
You’ll have to specifically make a claim for diminished value as part of your larger personal injury claim.
While you can certainly do so yourself, there’s really no harm in scheduling a consultation with a personal injury attorney to talk over your options.