Understanding Diminished Value Claims After a Car Accident

Disclaimer: This article is for general informational purposes only and is not legal advice. Consult a licensed attorney in Maryland for advice about your specific situation.

Detailed Answer

What is diminished value?

Diminished value is the difference between a vehicle’s market value right before a crash and its market value after repairs are completed. Even if a car is repaired perfectly, the fact it has an accident history can reduce its resale value.

Types of diminished value claims

• Inherent diminished value (most common): Loss in market value caused solely by the vehicle’s history of damage, even after quality repairs.
• Immediate diminished value: The drop in value immediately after the crash and before repairs.
• Repair-related diminished value: Loss caused by incomplete or poor repairs.

Who can make a claim in Maryland?

Generally, the vehicle owner can pursue a diminished value claim. You typically make this claim against the at-fault driver’s liability insurer (a third-party claim). If you file a claim with your own insurer (a first-party claim), coverage and outcomes depend on your policy terms and whether your carrier acknowledges diminished value coverage.

Key Maryland rules and timelines

Keep timing in mind. In Maryland, the general statute of limitations for many civil claims for injury to property is three years. See Md. Code, Courts & Judicial Proceedings §5-101 for the applicable limitation period and exceptions: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=cj&section=5-101. Also, follow all notice and proof requirements in your insurance policy.

Typical evidence used to prove diminished value

• Pre-accident value: market guides (Kelley Blue Book, NADA), recent comparable sales.
• Post-repair market value: dealer or broker quotes, market comps.
• Repair records and detailed invoices showing what was repaired and replaced.
• Independent diminished value appraisal by a qualified appraiser.
• Vehicle history reports (Carfax, AutoCheck) showing accident history.
• Photographs of vehicle before and after repair, and of the damage.

Step-by-step claim process in Maryland

1. Preserve documents and evidence: Keep repair invoices, photos, diagnostics, and any pre-accident proof of value (advertisements, recent appraisal, or purchase price).
2. Get an independent appraisal: A certified appraiser who understands diminished value can estimate the loss in market value and produce a written report to submit with your demand.
3. Make a demand to the at-fault insurer: Send a written demand package that includes the appraisal, repair records, market comparables, and a clear monetary demand. Include a deadline for response.
4. Negotiate: The insurer may counter-offer. Insurers often dispute inherent diminished value; be ready with supporting market data and the appraiser’s report.
5. If denied or underpaid: Consider mediation, appraisal clauses if your policy contains one, or filing a lawsuit before the statute of limitations runs out.
6. Filing a complaint with the Maryland Insurance Administration: If you believe an insurer acted improperly during claim handling, you can contact the Maryland Insurance Administration for consumer help: https://insurance.maryland.gov/Consumer/Pages/Auto.aspx.

When you might need an attorney

Consider speaking with a Maryland attorney if:

• The insurer refuses to pay any diminished value despite strong evidence.
• The value at stake is substantial relative to the effort required to pursue the claim.
• Legal defenses (comparative negligence or policy limitations) are raised by the insurer.
• You need help preparing a demand, negotiating settlement, or filing a court action before the statute of limitations expires.

Helpful Hints

• Act quickly. Gather and preserve pre-accident evidence and repair records while details remain fresh.
• Get multiple market value sources—dealer quotes, private sale listings, and guidebook values strengthen your case.
• Use a qualified, independent appraiser who has experience with diminished value reports.
• Don’t sign releases or repair waivers that could give up your right to pursue diminished value without consulting your insurer or an attorney.
• Keep written records of all communications with insurers: dates, times, names, and summaries of conversations.
• If your own insurer pays for repairs under your policy, ask about subrogation: your carrier may pursue the at-fault insurer and you may have to cooperate.
• If negotiations stall, consider alternative dispute resolution before filing suit to save time and cost.

Additional resources: Maryland Insurance Administration consumer resources: https://insurance.maryland.gov/Consumer/Pages/Auto.aspx. For more on filing civil claims in Maryland courts, see the Maryland Courts website: https://www.mdcourts.gov/.

Remember: this summary explains how diminished value claims commonly proceed in Maryland. It does not create an attorney-client relationship and is not a substitute for legal advice tailored to your facts.