Besides being injured in an accident in Pompano Beach, Florida, a victim could also suffer property damage. For instance, a negligent driver can hit another car on the road in a collision. In this case, the victim’s car could be totaled and result in a write-off by an insurer.
When this happens, they will offer a sum equal to the car’s actual cash value. Understanding how an insurer calculates this amount can help accident victims estimate the potential payout.
Still, determining a car’s actual value is one thing; an insurer’s valuation may be far less than expected. A Pompano Beach car accident lawyer offers accident victims a fighting chance at seeking a fair payout.
What Is a Car’s Actual Value After a Traffic Accident?
A car’s actual cash value (ACV) is its worth before the accident minus the estimate for depreciation.
For example, suppose a car costs $15,000 today. After operating the vehicle for two years, it is totaled in a collision. An insurer may determine that its value depreciated by $1,500 every year.
Therefore, after two years, the car’s actual value becomes $9,000. That is, $15,000 minus $6,000. The owner will receive $9,000. Depending on the circumstances, obtaining less in a car accident case is possible.
Significant Factors in Calculating a Car’s Actual Cash Value
In the case of a total loss, an insurance company makes a payout that accounts for the ACV. Before making a payout, however, they evaluate a car to estimate its actual value.
Significant factors that affect this process are:
- Basic vehicle information about a car, such as its year, make and model, mileage, etc.
- The vehicle history before the accident
- A car’s post-accident condition, before and after repairs
- The primary use of the vehicle
- Vehicle modifications (aftermarket parts added to the car after purchase and other alterations to its original condition)
- Possible salvage and resale value of the whole car or parts
- Prices of similar vehicles within the area, in dealerships, or in verified publications
Essentially, ACV equals a car’s fair market value minus depreciation. Therefore, it’s usually less than the market price of a new car.
In evaluating a car, other standard terms used are fair market value and replacement value. Depending on certain factors, these values may or may not equal a car’s actual worth.
Actual Value and Fair Market Value
In some cases, the actual value of a car can reflect the fair market value. Fair market value is what a car would sell for on the market before the accident.
Still, a car’s actual value can differ from its fair market value. Sometimes, a potential buyer may be willing to pay a reasonable amount or range of prices.
Is ACV Different From Replacement Costs?
A car’s replacement value is another assessment that insurers use in an accident case. First, a collision can render a car a total or partial loss. Replacement value or cost is the sum of money that will replace the vehicle with a new one after the accident.
Unlike ACV, depreciation does not affect a car’s replacement cost. Therefore, this value could be steady and reflect a car’s fair market value, or it may increase for particular models.
Total Loss and Diminished Values in a Car Accident Case
There are two ways to assess physical damage to a car when an accident occurs. First, insurers refer to it as a total loss or write it off when a car is damaged beyond repair. Under Florida law, this refers to a car’s repair costs exceeding 80 percent of its actual value before the accident.
Then, they pay out an amount that reflects a car’s actual value. However, a collision may not total a car. In this case, it can undergo the necessary procedures to return to its pre-accident condition.
When the car goes on the market for resale, you’ll typically receive offers well below its pre-accident market price. This price reflects a diminished value.
Filing a diminished claim can help recover the difference between the car’s market price and current value. Therefore, it’s essential to understand how reduced value affects a car accident case.
Types of Diminished Values
The different types of diminished value in a car accident case are:
Immediate Diminished Value
This value equals a car’s resale value before an accident minus its resale worth after an accident. Also, it reflects the diminution before the owner repairs it.
Inherent Diminished Value
This loss of value is the most popular form of diminished value claims. In this case, a car receives the best repair after an accident.
However, it’s worth less than its usual value because of the accident history. During resale, potential buyers often prepare to offer less money.
Repair-Related Diminished Value
A car can also lose value when repairs cannot restore it to its original condition. Possible causes include improper repairs, low-quality repair parts, or the inability to restore the original aesthetic state.
Filing a Diminished Value Claim
Florida is a diminished value state. A car owner can claim the vehicle’s diminished value after an accident.
Under Florida law, the vehicle owner can bring legal action against the at-fault party in the accident. This process involves filing a diminished value claim directly with their insurance company.
Filing a car insurance claim for diminished value requires evidence of the lost value (diminution) and its estimate in dollars. It can be challenging to file a diminished claim. A Pompano Beach car accident lawyer can help determine if it’s the right option in a car accident case.
When you decide to file this kind of claim, it’s helpful to consider the following:
- The Car’s Value Before the Accident: A diminished value claim depends on appraising the car’s value relative to the market value. An appraisal should link the loss of value to the accident history. Note, though, that payout is less likely for a car that is older and has extensive damages.
- Being at Fault in an Accident: Establishing fault is vital in a diminished value claim. If you’re at fault and file a claim, you likely won’t receive an insurance payout.
- State Law: In Florida, drivers must hold insurance before using the road. Under the law, a victim can pursue a legal claim and recover damages from the at-fault party if their personal injury protection insurance policy does not cover their losses. Also, a 2-years Statute of Limitations affects diminished value claims.
A Pompano Beach Car Accident Lawyer Can Help You Recover Compensation
Accidents often result in devastating costs for victims. Whether it’s bodily harm or destruction of property such as a car. A Pompano Beach car accident lawyer can help with seeking recovery from these damages.
Our team at Frankl Kominsky Injury Lawyers is familiar with car accident cases. With our help, accident victims can prepare a legal claim and fight for a fair settlement (by appointment).
Once an accident occurs, the time to seek compensation for damages starts running. Therefore, waste no time finding quality advice from our legal experts. Call us at (561) 800-8000 for a free initial consultation.