Having great auto insurance coverage is important if you own a car, especially if you end up in a car accident. If another driver strikes your car while you are driving, that person's auto insurance will pay for your claim; however, that is assuming the other driver has insurance. If they don't, your insurance company may end up paying the claim. As you try to settle a car accident claim like this, there will be many important factors to consider, including finding the diminished value of your car.
Here are several things you should know about what this term refers to.
What Is Diminished Value?
Auto insurance serves two key purposes. The first is to protect your car, and the second is to protect yourself if you cause an accident. Anytime an accident occurs and causes damage to a car, the car that is damaged will lose value. To compensate for the damages, the insurance company, that is responsible to pay, will provide enough money to make all the necessary repairs.
While this system works out well, it does not automatically compensate a person for the automatic loss in value that occurs to the car simply by being in an accident. A car that is in an accident loses value just because it was in an accident, and this is called diminished value. This value represents the difference in value a car is worth before it is in an accident to its value afterwards.
To understand this more, just think about how you feel buying a car that was wrecked. Most people are leery to do this, and this is simply because a car can have more issues after an accident occurs to it. When accidents occur, they are generally reported and placed on the history reports of cars. If you end up selling your car, the dealer or private individual that buys it may look up the history and will see that it was in an accident. Once the person finds this out, he or she is likely to offer you a lower amount for your car.
How Can You Be Compensated for This When the Other Driver Has Insurance?
If another driver caused the accident you were in, that person's insurance company may agree to compensate you for the diminished value your car has experienced. The only thing you need to know is that most insurance companies do not offer compensation for this unless a person asks.
To receive this type of compensation, you may need to hire an appraiser to find out what your car is worth now compared to what it was worth just before the accident happened. The difference in these two amounts is the diminished value, and this is the amount of money you should ask for from the insurance company. In many cases, car appraisers will look up values of cars on reputable car valuation websites, such as Kelley Blue Book.
What Can You Do if the Other Driver Doesn't Have Auto Insurance?
When the at-fault driver doesn't have insurance, you will have to rely on your own insurance coverage to pay for the repairs on your car, and this includes compensation for diminished value. This type of compensation is usually covered under your own policy through uninsured motorist coverage. If you did not have uninsured coverage, you might not be able to make a claim for any of the damages that occurred from this accident.
Diminished value is not something you can avoid if you are in an accident, but you can take the right steps to fully protect yourself and your car by purchasing great auto insurance coverage. To learn more or to receive a quote, contact an insurance company today.
Share23 March 2017
I still remember the first time I had to chose an insurance policy; I was 17 years old and had just saved up enough money to afford my very first car. I was so excited to begin driving, but overwhelmed with all of the different auto insurance options. My father helped me chose a full-coverage policy that would cover the cost of my car if it were to become damaged in an accident. When I inevitably caused a small fender-bender as a new driver, my insurance company paid for my car repairs, so it sure was the best policy for me! Now that I am older and have learned a lot about home insurance and other types of insurance, I thought I would make a blog to help others who need insurance advice, like what my dad gave me. I hope I can help you make wise insurance decisions!