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The value of a car depreciates after an auto accident, but how do insurance companies determine that value? The total depends on the type of car and the accident history of that car. The car’s value can decrease by its diminished value, which is calculated by the insurance company when they send an agent to come and assess the damage.
Diminished Value and the 17c Formula
Diminished value is the monetary difference between what the car was worth before the accident happened and what it is worth after the accident happened. Insurance companies determine the diminished value of a car by using what is called the 17c Formula.
The Formula originated in 2001 in Georgia following a lawsuit that obligated State Farm to pay out more than 25,000 insurance claims. In order to do this efficiently, the 17c Formula was created as a simple way to standardize the calculations across all of the claims. The Formula worked, and now close to all insurance companies use it as the way to determine the value of cars after a wreck.
Is The Formula Accurate?
Some see the Formula as inefficient given that it calculates the loss of value equally among all types of makes and models, meaning a crashed Ferrari is appraised the same way as a crashed Ford Focus. Insurance companies ultimately give less than what they really should with diminished value checks. Often, the total should be in the thousands but motorists receive checks for hundreds. There are several online resources that provide the formula for consumers to calculate their vehicle’s value.
Is There Another Way To Evaluate My Car After An Accident?
Insurance companies may come to you with an extremely low offer, but you can refuse it and hire a private appraiser to come and look at the wrecked car. Once you have that appraisal, you can go back to the insurance company and counter their original offer.
It’s important to understand your insurance policy and rights before agreeing to the price your insurance company gives you. If you have any questions, please feel free to contact one of the members of Your Hometown Body Shop.