Being in a car accident is a scary experience for anyone—no matter how minor or severe the crash. Your first concern should always be the safety and well-being of yourself and any passengers that were in the vehicle at the time of the collision.
But once all injuries are treated, and the dust has settled, there’s often another looming issue: determining the value of a car after an accident.
Any vehicle property damage incurred in the collision will have an effect on the value of your car post-crash. It’s very possible that you will be dealing with diminished value, which can impact how much you can sell your car for in the future. Even a new car completely repaired after an accident can have a lower market value than an older one that was never involved in a crash.
However, it’s possible to file a claim to recover compensation for a vehicle’s diminished value. Read on to learn more about how to determine the value of a car that has been involved in an accident—and what you can do to recover your losses.
How Do You Calculate Car Value After a Collision?
Auto insurance companies typically use a formula to determine the value of a car after an accident. The first step is to calculate the baseline value of the vehicle based on factors like:
- Make, model, and year
- Condition of the car’s interior and exterior
- Engine type, size, and power
- Features and upgrades
- Color and paint job
There are a few different guides that can serve as tools in determining a car’s value. The valuation guides most commonly used to assess the market value of a motor vehicle are:
Next, the insurance company will apply a few calculations that factor in the loss of value due to the vehicle accident and miles traveled.
How Much Value Does a Car Lose in an Accident?
After the car’s sale value has been determined by using Kelley Blue Book or another resource, insurance companies typically begin calculations by applying a 10% base loss of value cap. This is usually the maximum amount that an insurance company will pay.
So, for example, if the value of your vehicle is $25,000, this number would be multiplied by 10% to give you $2,500—the maximum you could receive for a diminished value from the auto insurer.
Next, the value will be further adjusted to reflect structural damage and wear and tear from vehicle miles traveled. These are calculated using “damage multipliers” and “mileage multipliers.”
Damage multipliers are denoted as numerals ranging from 0 to 1 and are based on severity of damage:
- 00 = no structural damage
- 25 = minor damage to structure/ vehicle panels
- 50 = moderate damage to structure/ vehicle panels
- 75 = major damage to structure/ vehicle panels
- 00 = severe structural damage
Mileage multipliers range from 0 to 1 and are a way for insurance companies to factor in the number of miles your vehicle has traveled into its value. The more miles your vehicle has traveled, the lower its value.
- 00 = 100,000 miles or more
- 20 = 80,000 to 99,999 miles
- 40 = 60,000 to 79,999 miles
- 60 = 40,000 to 59,999 miles
- 80 = 20,000 to 29,999 miles
- 00 = 19,999 miles or fewer
Although these formulas are supposed to exist to make sure vehicle owners are given fair value, it’s difficult to know on your own if what the insurance company is offering actually reflects fair value.
Many times, car owners are offered a settlement for property damage that is far lower than what they actually deserve. And going to sell your car later, you may find that your vehicle has lost significant value—value that you will never be able to recover.
When Is a Car Considered “Totaled” After an Accident?
In some accident scenarios, your car may be “totaled” or deemed a “total loss.” Usually, this means that the cost to repair the vehicle exceeds its value, or at least 70 – 80% of the value.
State laws differ on the definition and legal thresholds for a totaled vehicle. Mississippi uses a total loss formula that compares your vehicle’s actual cash value (ACV) to the total of your repair costs plus the car’s salvage value. If the vehicle’s ACV is equal to or less than the cost of repairs plus salvage value, it is considered a total loss.
What Is a Diminished Value Claim?
Mississippi is a diminished value state, meaning that car accident victims have the right to file for additional compensation to cover the reduced value of their car as part of a vehicle property damage claim.
If you were in a car accident that left you with diminished value on your vehicle, it may be possible to file a claim with the at-fault driver’s auto insurance company to cover this loss. This claim, if successful, would allow you to make up the value that your vehicle lost because it was in an accident. While your auto insurance may help cover some of the costs of vehicle repairs, it may not address the loss of value.
There are three types of diminished value claims:
- Immediate diminished value (the difference between a car’s value before and after the crash)
- Inherent diminished value (the difference between the value pre-accident and after repairs)
- Repair-related diminished value (diminished value due to low-quality repairs made post-crash)
It is best to speak with a qualified lawyer about your legal options for financial recovery following a vehicle accident. An experienced attorney can help you determine the value of your car after the accident and advise you on the best way to make sure you make a full financial recovery.
How Do I Know if I’m Getting Fair Value for My Car After an Accident?
Determining fair value of a car after an accident is not easy without an expert’s help.
If you’re worried that you’re losing value on your vehicle because it was involved in a crash caused by another motorist, schedule a free case consultation with the Jackson car accident attorneys at Pittman Roberts & Welsh, PLLC.
We fully support our clients in all legal matters related to car accident claims—and we can help make sure you don’t lose money because another driver was negligent. Contact us today to learn how we can help you.