Wednesday, April 21, 2010

Your car will never be the same after an accident 1

No matter how beautifully your car was restored, its resale value never recovers from an accident. Whether you can collect on 'diminished value' depends most on where you live.

Your brand-new sports car is rear-ended at a stop sign. The other guy's insurance company pays for repairs using only original parts at the best body shop in town. It even paid for a luxury rental while your car was being fixed.

Are you happy?

Well, you might be if you plan to drive the car until the wheels fall off. Probably not if you think you may want to sell or trade the car in the next few years. Because one thing's for certain: No matter how well your car has been fixed, it's not worth as much as it was moments before the guy on the cell phone piled into you.
Why? Because your car now has a record of being wrecked that will follow it wherever it goes. And if any potential buyers check with any of several car-history services, they're not going to be willing to pay as much for it as they would have before it was in the accident, regardless how well it's been repaired.

It's your loss

The difference between what your car was worth before and after the car accident is called "diminished value." The difference, according to consumer organizations, can be as much as 18%.Most insurance companies and state insurance departments say insurers are not obligated to pay for diminished value. Others -- most notably the state of Georgia -- say they are. How successful you may be in making a diminished-value claim depends largely on what state you call home.

One company that built its business on the concept of diminished value is "Accident damage can affect both the safety and reliability of the vehicle, even after repairs have been made," says Scott Fredericks, vice president of CarFax, which maintains a database of damaged vehicles around the country.
No matter how well a car has been repaired, Fredericks says, consumers should be wary of any vehicle that has been in a serious accident. Frame repairs, flood damage and any accident that causes an airbag to deploy should get extra scrutiny.

When keys can cost hundreds of dollars and headlights thousands, you can bet virtually any repair bill will be a shocker.
"Naturally the level of concern will depend largely on how the vehicle was damaged and how well it has been repaired," he says. So, if you thought your vintage Mustang was worth $10,000, it might be worth only $6,000 after a storm blows a tree onto it -- even after it's expertly repaired. The markdown is because future buyers may be wary of hidden problems or damage that went unnoticed during the repairs.

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