Feb. 8, 2007

Do I have the right to ask for compensation from my insurer for the depreciation of my vehicle that was damaged in an accident?

Melissa, Alabama

Dear Melissa,

When your car is damaged in an accident, you may have the right to ask your insurer to compensate you for the "diminished value" your vehicle has sustained. Check your policy language or contact your insurance agent to see if your policy allows you to be compensated for diminished value.

To calculate diminished value, have your vehicle inspected by a repair facility that uses a diminished-value software program, by an independent appraiser, or by a dealership after it's been repaired. The inspection can cost anywhere between $75 and $150. Make sure you get the results of the inspection in writing.

You can then take the diminished-value report to your insurer and request a diminished-value payment. If your insurer objects, ask it to put its denial in writing. Plus, ask your insurer to supply the policy language that shows your car's diminished value is not covered.

If your request is denied, you may want to contact the Alabama Department of Insurance to see what recourse you have. If that doesn't bring results, you may want to hire an attorney. However, you have to weigh the cost of hiring an attorney vs. what you think you may get in a diminished value payment.

For more information, read Court battles escalate over diminished-value payments for cars.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.