Your car will never be the same after an accident 2

Insurers not liable for loss of value

Insurance policies in most states guarantee that a car will be repaired to pre-accident condition. Unless state courts mandate otherwise, they don't compensate for perceived loss of value."We do not believe that it is automatic or inherent that an auto's value diminishes after an accident if the proper repairs by a skilled professional are made as they should be," says Gary Stephenson, spokesman for State Farm Auto Insurance in Bloomington, Ill., one of the nation's largest auto insurers.
Courts in states including Texas, Maine, South Carolina and Delaware agree with State Farm. In past cases, they've ruled against the idea of diminished value. However, judges in several states, including Georgia and Kansas, have ruled insurers must compensate policyholders for any real loss of value from an accident.
Still others say it depends on who is at fault for the accident. In Louisiana, if you are at fault, the courts almost universally have said that diminished value does not come into play, says Don Beery, of Eustis Insurance and Benefits in New Orleans. "Third-party claims, on the other hand, depending on your company and your state, can be interpreted differently."

If someone hits you and his or her insurer picks up the bill, you might be covered, since some courts have decided that a loss includes lost value. But since lost value was not considered when the policies were being priced, insurance companies say, they would lose too much money if they were forced to pay these claims. "To expand auto coverage beyond proper repair to include payment for diminished value would add more costs and claims and would drive insurance rates upward for everyone," Stephenson says.Some insurers argue that some cars even gain value after they are in an accident. Take a car with a bum engine and 100,000 miles on it. It gets hit head-on and needs a new engine. If the insurer pays for all the repairs plus a new engine, that car is worth more than it was before the accident. In that case, the insurer could ask the owner to pay for part of the repairs.

What you can do

Owners of damaged cars trying to sell or trade in their cars are left with the choice of trying to hide the damage and hoping no one finds out; biting the bullet and accepting the lower price, or fighting their insurers. To do the latter, start by finding out how much the car would have been worth before it was damaged, either on the Internet or by checking used car sales in your area.

When keys can cost hundreds of dollars and headlights thousands, you can bet virtually any repair bill will be a shocker.

With an accurate price in hand, first try the insurance agent who sold you the policy. "If it is a dedicated agent who only sells one insurance company, you may have a hard sell. But if you went through an independent agent, they will be more likely to fight for you," Beery says. The next step is your state insurance commissioner. As a last resort, there are the courts -- obviously, an expensive alternative.Updated June 4, 2008