According to the Texas Department of Transportation: a car crash occurs every minute and 7 seconds. While some of these accidents result in injury and/or death, most have property damage as the main loss. When this happens, your vehicle is no longer worth what it was before the crash, and you may have a claim for the reduction in market value. In this blog, we explain how diminished value claims work in Texas personal injury law and how an experienced car accident attorney in Austin can help.
Fault and Liability in a Texas Diminished Value Claim
If you were to sell your vehicle after an accident, it’s highly likely that you would receive less for it than you would have before the crash occurred. This difference in value is the foundation of a diminished value claim.
Texas is a fault state, so all drivers are required to maintain liability insurance. After an accident, the insurance company for the at-fault driver compensates the party or parties who suffered damages. In some collisions, one driver is solely responsible: for example, your vehicle is legally parked and they crash into it while distracted by their phone. In other cases, both parties share some degree of fault: a drunk driver runs a red light and hits your vehicle, but you weren’t looking both ways as you backed out of your driveway.
Texas accounts for shared liability by using a modified comparative fault system. It states that if you’re in an accident, you can recover the amount of damages you suffered minus the percentage attributed to you. The only condition is that your share of fault must be no more than 50%- any higher and you can’t seek compensation.
How Does a Diminished Value Claim Work?
You can recover property damages in a car accident by filing a diminished value claim. Crash damage to your vehicle can range from minor scratches or a dented bumper to complete destruction. Whatever the case may be, the responsible party must compensate you accordingly. For example, if the car is now inoperable, that amount represents the vehicle’s total value. When the car can be repaired, the amount corresponds to the cost of restoring it to its pre-crash condition.
The main issue with repairs is that even if the body shop can restore your car to its pre-crash condition, it’s still likely to lose value. The reason is that car crashes often cause underlying problems which aren’t always visible. If your car is worth less than it was before the accident, you can make a diminished value claim for that difference.
Different Types of Diminished Value Claims in Texas
In most cases, diminished value claims fall into one of three categories:
- Inherent Diminished Value: This value loss arises from the mere fact that your car was involved in a collision. When you resell your vehicle, the crash will be indicated in reports, which can affect its value.
- Immediate Diminished Value: A vehicle’s immediate diminished value is the difference between its resale value after an accident and before repairs. It is rare to use diminished value of this type.
- Repair-Related Diminished Value: With repair-related diminished value, the vehicle’s value is decreased if it cannot be restored to its previous condition, or if the repairs result in a loss of value.
Many insurance companies calculate diminished value using a formula called the 17c Diminished Value Formula. This approach starts by calculating the current value of your vehicle, which will depend on the year, make, and model, and then applying a 10% cap to get base loss of value. This number is then calculated according to the level of damage:
- 1 = severe structural damage
- .75 = major damage to structure and panels
- .50 = moderate damage to structure and panels
- .25 = minor damage to structure and panels
- 0 = no structural damage or replaced panels
Vehicle mileage is then taken into consideration. After doing the damage level calculation above, the insurer will multiply it based on mileage:
- 1 = 0-19,999 miles
- .80 = 20,000-39,999 miles
- .60 = 40,000-59,999 miles
- .40 = 60,000-79,999 miles
- .20 = 80,000-99,999 miles
- 0 = 100,000+ miles
Not every insurer uses the 17c formula though, so it’s important to find out how the company handling your claim goes about calculating diminished value.
How To File Diminished Value Claims in Texas
The process of filing diminished value claims in Texas is similar to filing any other insurance claim. You’ll want to start by confirming the amount of the diminished value. There are a few ways you can do this:
- Look up your vehicle’s pre- and post-accident value in the Kelly Blue Book.
- Get a valuation from a used car dealer
- Get a quote from an auto repair shop
There are two ways to file a diminished value claim. Which one you go with will depend on the circumstances of the crash:
- First-Party Insurance Claim: You file the claim with your own insurance company. This is the option when you are at fault for the accident.
- Third-Party Insurance Claim: If someone else is at fault for the accident, you will need to file a diminished value claim with their insurance provider. This step is incorporated into an overall personal injury claim if you suffered injuries in the accident.
Personal injury claims in Texas, including those related to diminished vehicle value after an accident, must be filed within two years. If you miss this deadline, your claim is likely to be dismissed, so it’s important to act as soon as possible.
How Can an Austin Personal Injury Lawyer Help Your Diminished Value Claim?
When you file a diminished value claim, an experienced personal injury lawyer can give you valuable advice regarding your legal rights, options, and potential next steps. In addition to assessing your damages, they will preserve important evidence, investigate the facts, prepare a strong case, and negotiate with the insurance company on your behalf.
When you’ve suffered diminished value damage in an accident, you don’t have to deal with the insurance company alone. Insurers will use any tactic possible to minimize payouts, and unrepresented claimants can be easily misled or taken advantage of. With a skilled and assertive car accident lawyer representing you, you stand the best chance of receiving a fair and reasonable settlement that includes diminished value damages.
Get a Free Consultation With a Texas Diminished Value Claims Lawyer
If you plan to file a Texas diminished value claim, it’s important to consult an experienced car accident attorney as soon as possible. The insurance company is less likely to deny your claim outright if you have a lawyer on your side from the beginning, and if they fail to make a fair settlement offer, your attorney can take your case to court to obtain the outcome you need.
At the Villarreal & Begum, LAW GUNS, we are experienced and aggressive advocates for those who have suffered injury and property loss in motor vehicle accidents. Our car accident lawyers take these cases on a contingency fee basis, meaning you will not owe legal fees until we obtain compensation for your injuries and other damages. To schedule a free consultation with one of our top-rated lawyers in Austin, please call (512) 800-0000 or contact us online today.