Guest Blog Author: Instamotor
After an auto accident, the value of a car depreciates and we want to share with you the ways insurance companies evaluate the worth of the car after it has been damaged.
Let’s say, knock on wood, the new car you’re driving that has full coverage from your insurance company gets rear-ended. If you decide to file a claim, your insurance company will send a claims adjuster to assess the damage, and tell you what the car is now worth.
Car Value Depreciation After an Accident
So, how much does a wreck depreciate a car? The total amount depends on the type of car, and whether or not the car has an accident in its history. The car’s value can decrease by its diminished value, which is calculated by the insurance company when they send an agent to come and assess the damage.
Diminished Value and the 17c Formula
Diminished value is the monetary difference between what the car was worth before the accident happened, and what it is worth after the accident happened. Insurance companies determine the diminished value of a car by using what is called the 17c Formula.
The Formula originated in 2001 in Georgia following a lawsuit that obligated State Farm to pay out more than 25,000 insurance claims. In order to do this efficiently, the 17c Formula was created as a simple way to standardize the calculations across all of the claims. The Formula worked, and now close to all insurance companies use it as the way to determine the value of cars after a wreck.
Is The Formula Accurate?
Some see the Formula as inefficient given that it calculates the loss of value equally among all types of makes and models, meaning a crashed Lamborghini is appraised the same way as a crashed Ford Focus. The insurance companies ultimately give less than what they really should with diminished value checks. Motorists can received checks for hundreds of dollars, when in reality the total should be closer to the thousands. Many online resources provide the Formula so consumers can calculate their own car’s value.
Is There A Different Way To Evaluate My Car After An Accident?
As the victim of a crash, you are not locked to this formula. The insurance companies may come to you with an extremely low offer, but you can refuse it, then hire a private appraiser to come and look at the wrecked car. Once you have that appraisal in your back pocket, you can go to your insurance company and counter their original offer.
It’s important to understand your insurance policy and rights before agreeing to the price your insurance company gives you.
If you want to learn more about how to preserve your car’s resale value, read this article.