A brand new car loses up to 20% of its value when you drive it off the lot, even if it is new. Therefore, the depreciation rate is much higher if it has been involved in an accident. Any major accident lowers the value of your car. However, there are some steps you can take to enhance the value of your vehicle after an accident.
Make the Required Repairs
First and foremost, make sure you repair the damaged parts of your vehicle. Take your vehicle to an experienced service and collision center. This will help you focus on the necessary repairs.
It is advisable to use OEM parts when repairing your damaged vehicle. OEM, in the auto parts world, stands for Original Equipment Manufacturer. It is the company that manufactures the parts used to make your vehicle. A specific manufacturer makes these parts to match a car's specifications. These parts cost more than aftermarket and recycled parts.
The main benefits of using OEM parts as opposed to aftermarket and recycled parts are as follows:
- Performance: Aftermarket parts may not fit the vehicle like the original molded part did. When it comes to the mechanical side, aftermarket parts can work great, but if the vehicle was damaged with the OEM part, the insurance company should replace it with an OEM part. OEM parts fit and function like the parts they are replacing. They are precisely the same as the originally installed parts. This gives you peace of mind that they will perform according to the required standards.
- Safety: In most circumstances, aftermarket parts don’t have to meet crash test requirements. The reverse is true for OEM parts. Choosing OEM parts for your repairs is enough assurance that they will stand the test of time.
- Resale Issues: When it comes to selling your vehicle, having OEM parts will give you the leverage to earn a better selling price than using aftermarket parts.
Upgrade Your Car
Another way of enhancing the value of your car after an accident is through maintenance. If your car is in good shape after making the appropriate repairs, you will boost its value. Ask your mechanic to install upgrades. This is a smart way of maximizing the value of your car even though it has been involved in a crash.
Some of the upgrades you should consider to make your car safer on the road include: a reverse camera, top-quality tires, and a blind-spot alert system. You can get a reverse camera as an aftermarket part. The camera will help you when you are in tight parking spots.
Tires affect your car's grip and handling. Cheaper tires blow out sooner or have lesser performance, especially when you are on wet tarmac. Upgrading to high-quality tires will enhance the value of your car.
Another significant upgrade is a blind-spot alert system. This system is essential when you are changing lanes on a highway or passing through a parking lot. An aftermarket blind-spot alert system will make it easier for you to change lanes safely. The system features sensors that detect a vehicle in your blind spot. This means you don’t have to bother turning or tilting your head while changing lanes.
Lastly, consider having the body shop buff, scratch repair, or fix & repaint other damaged cosmetics on your vehicle so after the accident repairs are completed, the entire car looks it's best and closest to new. Cosmetic damages can reduce the resale value of a vehicle, in both trade-in and private party sales. Although this upgrade will not make your car safer on the road, it will look new. Any prospective buyer is going to be drawn to the fresh paint on your vehicle.
Consider a Diminished Value Claim
Another way to enhance the value of your car is by considering a diminished value claim. This claim enables you to recover an amount equal to the market value of your car before the accident minus the value of your car after the accident. For instance, after a car accident caused by another driver, you should make a claim against the at-fault driver’s insurer for repairs to your vehicle.
If the accident caused the value of your car to depreciate, then you should consider the same insure when filing a diminished value claim. This is important if you plan on selling your vehicle. Car buyers are turned away by vehicles that are involved in accidents. Some try to get a low price based on the diminished value of the car after an accident. As a result, the buyers would offer X number of dollars less for your car.
To determine whether to file a diminished value claim, you should consider the following factors.
- The Value of Your Car Before the Crash: Older cars with structural damage and a lot of mileage have a lower value than newer cars with no history of accidents. Therefore, if your vehicle is old, you are better off not filing a diminished value claim because you will get an insignificant compensation.
- Who Is Liable: If you are liable for the accident, your insurance company will not process a diminished value claim.
- State Laws: The laws on diminished value claims vary depending on where you are. Inquire from your lawyer how diminished value claims are calculated in your state. Alternatively, you can visit your state’s government website and review the laws on diminished value claims.
- Insurance Status of the Other Driver: If the other driver is to blame for the accident, make sure they are insured. If they aren’t insured, make sure your insurance policy has uninsured motorist coverage. If your policy doesn’t have this coverage, you cannot file a diminished value claim with your insurance provider.
When a car is involved in an accident, this incident is reflected in the records on the vehicle's history. Car buyers are usually turned off by cars that have been involved in accidents and will usually demand a lower value for them. According to a report by Carfax, a vehicle that is involved in an accident will lose up to $500 in resale value. If the vehicle sustained significant damage, the resale value could depreciate by up to $2,100.
Some ways to minimize the depreciation of your car's value after an accident include performing the necessary repairs, using OEM replacements, installing upgrades, and filing a diminished value claim.