Diminished Value Claim Maryland (For Vehicles)

Please note: The following is not legal advice. Do not assume the facts herein are applicable to your case without talking to a lawyer. Each case is unique, and results depend on a variety of factors. For more information, see the full disclaimer below the article.

Many people don’t anticipate having to deal with making a diminished value claim for their vehicle’s loss in value after they’re injured in a collision. Health always comes first, and that’s the way it should be. Still, once all the dust settles, many accident victims will tell you, diminished value becomes a concern.

Even if your vehicle gets repaired well, it’s not always the same car. For example, sometimes repairs involve replacing original factory parts with older or substandard parts.

Regardless of the kind of repair parts used, none of this takes into account how the car’s resale value might be affected when the owner later goes to sell the vehicle and the buyer knows it has been involved in a serious collision.

If you’re asking yourself any of the following, you’ve come to the right place.

• What happens when I go to sell the car? 
• Won’t the car be worth less money?
• Are people less likely to buy a used car that’s been in an accident?
• What happens if the car isn’t the same after the repair?

Diminished Value Claim Maryland

Maryland is a diminished value state, meaning that vehicle owners may be eligible for compensation for the decrease in their vehicle’s market value after an accident. This decrease, known as diminished value, represents the difference between the car’s current selling price and its value before the accident.

The law may entitle you to be compensated for the damages to the car (known in lay terms as a property damage claim) in addition to the loss of value of the car. This loss of value is referred to as “diminished value.”

How Much Is My Car Worth After an Accident?

Any damage the vehicle sustains reduces its value when you’re involved in an accident. The vehicle attains a diminished value even if the car is fully repaired, as future buyers will be wary of buying a vehicle previously involved in a crash.

While the vehicle may be worth more to you than its market value, an insurer will offer the least possible amount. Most insurance providers reduce the vehicle’s value using factors such as age, mileage, and condition. Here’s how insurance companies calculate the diminished value:

Insurance companies calculate the diminished value using the 17c formula created in the Mabyrl Vs State Farm lawsuit in Georgia. 

Here are the steps applied to calculate the diminished value using the 17c formula:

Step 1: Calculate the Value of the Vehicle

The first step is determining the vehicle’s value before the accident. You can estimate the value of your car using online pricing guides like Kelley Blue Book(KBB), NADA, or Edmunds.

Step 2: Apply a 10% Cap to that Value

Insurance companies apply a base value loss of 10 per cent after a vehicle is involved in an accident, which is the maximum value they’ll pay for a claim. 

Step 3: Apply a Damage Multiplier

At this stage, the 10% base value multiplier is adjusted to reflect the structural damage your car sustained. The multiplier ranges from 0 to 1, where 00 represents no structural damage, and 1 symbolizes severe structural damage.

Here’s the breakdown of the numbers:

• 00— No structural damage or replaced panels
• 0.25— Minor damage to panels and structures
• 0.50— Moderate damage to panels and structures
• O.75 Major damage to panels and structure
• 1.00—Severe structural damage

Suppose a vehicle sustained moderate damage to its panels and structure; the result of applying the damage multiplier will be $3,000 * 0.50 = $1,500.

Step 4: Apply a Mileage Multiplier

Subsequently, an insurer will adjust the value again to reflect your car’s mileage. The number also ranges from 0.00 to 1.00, where 1.00 reflects 0-19,999 miles, with 0.00 reflecting 100,000 miles or more.

So, using the above example and supposing your vehicle had 19,000 miles, after applying the mileage multiplier, the value will be $1,500 * 1= $1,500. 

You’ll receive $1,500 as the final amount from an insurance company as the diminished value.

Q: How will I be able to get compensation in this situation? (When am I eligible to make the claim?)

You can typically only get compensation for this type of loss in Maryland if 1.) You are involved in an accident, and 2.) You are the owner of the car involved, and 3.) You are making a claim against the other at-fault driver’s policy. It’s important to note that if you are making a claim for property damage under your own collision policy, you will not be able to claim diminished value in Maryland.

Other states may have different rules in this respect. Our attorneys regularly handle diminished value claims in Maryland, Washington, DC, and Virginia. If you would like to discuss whether you are eligible to make a claim in one of these states, please feel free to contact us for a free consultation.

Q. Why do I need an attorney to handle a diminished value claim in Maryland?

A. You don’t necessarily. There is nothing to stop you from making this type of claim on your own without a lawyer. Just keep in mind, in today’s world where information is available instantaneously by internet or fax, if your accident has made its way into the ‘Car-Fax’ system, it will almost certainly have an effect on your ability to sell your vehicle if it has been involved in an accident before. 

Most people will check ‘Car-Fax’ or will want to know if the vehicle was involved in previous accidents and whether or not there was frame damage or other serious damage to the vehicle. I encourage clients who don’t need or are unwilling to hire a lawyer to make these claims so they are not surprised later on when they go to sell the vehicle and have already settled their case.

Notwithstanding the above, an experienced attorney will work with you and fight the insurance companies on your behalf to get you maximum compensation for the lost value of your vehicle, and so it is sometimes a good idea to hire one. Especially if you have also been injured in the accident. Many lawyers will handle the diminished value claim in addition to your bodily injury claim at no extra charge to you!

Keep in mind that if you have a vehicle that is worth a lot of money or a newer car, the value of the car is more likely to decrease significantly after an accident, even if the car is repaired well!

Q. How is the compensation for the loss of value determined? How do I know how much less my vehicle is worth, now that it has been in an accident and repaired?

A. The most persuasive way to make these claims is to have an expert determination made. You can always try to make your case to the insurance carrier using Kelley Blue Book Values or other comparable asking prices for cars with accident histories, but you may not be able to pinpoint the actual value diminishment unless you have an expert take a look at the estimates.

Assuming you have a lawyer, once the repairs of your vehicle are complete and you are satisfied with the repairs, the attorney will hire an expert to assist you in determining the loss of value to the vehicle or “diminished value.” 

The expert can then determine what the value of the vehicle was before the accident and what the value of the vehicle is after the accident, and the difference is calculated to be the diminished value. The expert will prepare a detailed report, and your attorney will use that report and fight the insurance company to get them to compensate you for that loss. If you do not have a lawyer, consider hiring your own expert.

You may also be able to hire an expert on your own. As an attorney, my critical consideration here is making sure we hire someone who not only knows what they are talking about, but also someone who is qualified to testify in a court of law as an expert in case the insurance company refuses to pay and we’re forced to file a lawsuit.

Often, when we file a lawsuit for an injured client where property damage claims are unresolved or have been resolved unsatisfactorily, resulting in a vehicle with loss of value, I will include a count in the complaint for diminished value and will subpoena an expert to trial to testify on their report.

I have also seen some lawyers subpoena body shop or engine mechanics in as experts. I am not comfortable relying on these types of experts because some judges will permit their testimony on the issue, and others will not. A qualified diminished value expert, on the other hand, is less likely to be stricken as an expert on the issue.

Insurance Companies Blow Off Diminished Value Claim Maryland

Insurance companies do not play a fair game regarding diminished value claims. By minimizing diminished value claims, they save hundreds of millions yearly at vehicle owners’ expense.

Most insurers in Maryland hesitate to pay the full value of claims to their policyholders and third-party claimants after an accident, including for property damage. Despite the unfavorable odds of diminished value claims, vehicle owners who aggressively pursue the insurers often find success.

Insurers Cannot Deny this Type of Coverage Under UM Coverage

If you are in an accident with an uninsured driver or someone who flees the scene and is not identified, you cannot file a third-party diminished value claim. So how do you cover the loss in value your car sustained? This is where underinsured motorist (UM) coverage comes into play.

UM coverage is a type of insurance that protects you financially in the event that you are involved in an accident with an at-fault driver who does not have sufficient insurance to cover your damages. While most people think of UM coverage in terms of medical expenses and property damage, it also extends to diminished value claims.

Diminished value refers to the reduction in value of a vehicle following an accident, even after repairs have been made. It’s important to note that diminished value is not limited to the physical damage to your vehicle, but also takes into account the stigma attached to a vehicle with a history of accidents. In simpler terms, even if your vehicle has been repaired to its pre-accident condition, its value may still be lower than a comparable vehicle with no accident history.

Now, you may be wondering why insurers would deny coverage for diminished value claims under UM coverage. The truth is, they cannot. In Maryland, insurers are legally obligated to provide coverage for diminished value claims under UM coverage. 

The Maryland Insurance Administration has made it clear that insurers must include coverage for diminished value in UM policies. Therefore, if you find yourself in a situation where your insurer is denying coverage for your diminished value claim, it is crucial to seek the assistance of an experienced attorney who can help you fight for what you are rightfully entitled to.

Retaining an attorney who has significant experience handling car accident claims can greatly increase your chances of success in pursuing a diminished value claim. An attorney will not only have a deep understanding of the legal framework surrounding UM coverage and diminished value claims but will also have the necessary negotiation skills to hold the insurer accountable. They will work tirelessly to ensure that you receive fair compensation for the diminished value of your vehicle.

Insurers cannot deny coverage for diminished value claims under UM coverage in Maryland. If you believe that you are entitled to compensation for the diminished value of your vehicle following an accident with an underinsured driver, do not hesitate to contact a lawyer who can guide you through the process and fight for your rights. 

With the help of an attorney, you can rest assured that you are taking the necessary steps to protect your financial interests and ensure that you receive fair compensation for the losses you have suffered. So, don’t let your insurer get away with denying your diminished value claim – seek legal assistance and give yourself the best chance at a successful resolution.

How to Beat the Insurance Company?

If you’ve sustained an injury in a car accident, working with a car accident attorney increases your chances of success. You should always work with an experienced car accident attorney because they have the right skills and knowledge to pursue an injury and diminished value claim.

An attorney can apply different strategies, including filing a diminished value lawsuit against an insurance company. An attorney can examine the facts of your case and decide whether it is worth pursuing.

An attorney can also compile various sources of evidence and negotiate for fair settlement value that covers your injury-related losses. More importantly, an attorney will communicate with an insurer on your behalf to protect your interests during negotiations.

Q. What can I do to help the attorney and provide documentation to prove the diminished value claim?

A. If your car is in very good condition, and you have a way to prove that with mechanic records, receipts for parts, oil changes, any maintenance records, and pictures, then you need to provide these to your attorney. Also, if you have a mechanic who worked on your car prior to the accident, ask that person to write a letter regarding the condition of the vehicle prior to the accident.

You could also go to a dealership that will tell you how much your car is worth after the accident and have them put it in writing. You would have to tell them that the car was involved in the accident.

Q. What if my personal injury attorney won’t handle my diminished value claim?

A. If you are already represented by a personal injury attorney and are concerned about your diminished value claim, we recommend generally that you call your existing lawyer and ask them to handle this portion of your claim for you in addition to your injury claim.

We regularly handle diminished value claims for all of our personal injury clients in addition to their injury claims. If your personal injury lawyer is not willing to handle both your injury and your personal injury claim together, you may want to consider switching to another lawyer who will.

Justin Katz is a partner in the Personal Injury Practice Group at Gordon, Feinblatt LLC. He regularly litigates diminished value and injury claims in the District Court of Maryland.

Justin can be reached at 410-576-4287.

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