No matter how well you repair damage from a car accident, your vehicle's value will decrease. The car's market value is determined by several post-collision factors, which include the presumed quality of repairs, additional undetected damage and stress on your car's otherwise undamaged components resulting from the accident. Your car's value after an accident is known as its “diminished value,” which can be as much as 18 percent lower than the value of an identical undamaged vehicle.
Many car-history services maintain collision records for all registered motor vehicles. For a fee, these services will examine the history associated with a car's vehicle identification number and inform any interested party of its past accidents or insurance claims. Cautious potential buyers may balk at the idea of owning a previously-damaged car, so it is more difficult to sell at full price after an accident.
Two repair-related factors influence your vehicle's value after an accident. The inherent diminished value of a vehicle assumes that all repairs were performed flawlessly, with original parts and by certified repair facilities, and adjusts the vehicle's value solely because it has a damage history. Repair-related diminished value accounts for the possibility of less-than-optimal repairs. Unlike inherent value, repair-related diminished value is not assumed. It is calculated according to any outcomes of repair that leave the car in less-than-new condition, such as cosmetic imperfections or major structural defects.
After a collision, it is possible to attempt to recover the difference between your vehicle's old value and its diminished value, but the process can be difficult. Many state insurance departments do not require insurers to cover loss due to diminished value, and the process for attempting to recover this amount varies on a case-by-case basis within the states where it is required by law.
Salvage laws vary from one state to another, but all generally establish a threshold on the amount of damage needed to declare a car a total loss. This amount usually ranges between 51 and 80 percent of the vehicle's Blue Book value prior to being damaged. If the repairs exceed this amount, your insurer declares it a total loss and reimburses you its full, undamaged value. The insurer then attempts to sell the damaged vehicle at auction or to a salvage yard, or gives you the option of buying it from them at its salvaged value. While the car can be repaired, undetected structural issues or wheel misalignments may persist and the car may not be safe to operate. The car's title declares it a salvaged vehicle, and insurers are unwilling to provide full coverage insurance on a vehicle with a salvage title.
