If your car is in an accident, its resale value could plummet by as much as 35% even if the damage is expertly repaired—but there might be a way to recover that money.

If you were not at fault, you likely can obtain “diminished value” compensation from the at-fault driver’s insurer—and in rare cases, you may be able to obtain this from your insurer even if you were at fault.

But you have to take action. The insurer will hope that you don’t know to file the claim…or it will offer a fraction of the true diminished value and hope you don’t know that you deserve more. To receive diminished-value compensation…

Check state laws. In most states, you can make a diminished-value claim only if the other driver was at fault—but there are exceptions…

  • You can make a claim even if you were at fault if the vehicle was insured in Georgia and/or the accident occurred in Georgia. You would make this claim under your own policy’s collision coverage.
  • If the other driver was at fault but uninsured or underinsured, your ability to make a claim depends on whether your policy’s uninsured-motorist component covers diminished value.
  • You cannot make a diminishedvalue claim if the accident occurred in Massachusetts or Michigan, regardless of who was at fault, though Michigan does have a comparable “mini-tort” rule that could allow you to recover up to $3,000 if the other driver was at fault.

These and other relevant state law details can be found at ICAN2000-dv. com (choose “Laws” from the “Diminished Value” menu, then select the state).

Helpful: You might be able to file a diminished-value claim even if the accident occurred several years ago and/or you have sold the vehicle. The statute of limitations for claims is between three and five years, though it is one year if the accident was in Louisiana.

Put the insurer on notice. When the atfault driver’s insurer contacts you about the accident, state, “I’m going to explore diminished value.”

Warning: If you receive a check to cover diminished value from the insurer, do not sign or cash it until you’ve taken the steps below to confirm that the amount is reasonable. Some insurers send low-ball payments in hopes that these will be cashed, making it difficult for you to receive additional compensation.

Request a free estimate from a diminished-value appraiser. Reputable appraisers include Collision Claim Associates (CollisionClaims.com)…Wreck Check (WreckCheck.com) and my organization, the Insurance Consumer Advocate Network (ICAN2000-dv.com). If you work with a different appraiser, confirm that he/she has been doing diminished value appraisals for at least five years and has a background as an insurance adjuster or in used-car sales.

Also: If you’re asked the approximate pre-accident value of your vehicle, calculate this at NADA.com.

Hire the appraiser to produce a full report. Do this if the free estimate suggests that the diminished value is significantly greater than the $250 to $350 you’re likely to be charged for the report. After filing the report with the insurer, your appraiser will negotiate with an appraiser hired by the insurer to settle on a compensation amount.

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