Car Accident Depreciation Compensation
Car Accident Depreciation Compensation
Car Accident Depreciation Compensation - The insurer does not pay me compensation for the reduction in the value of the car after an accident.
My car was hit by another, which caused a lot of damage, but the insurer will compensate me for the depreciation in one lump sum. Photo: iStock
Car Accident Depreciation Compensation
Car Accident Depreciation Compensation
My car was hit by another car causing serious damage (around €18,500 to repair). The other party admitted fault and the vehicle was repaired.
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But my question is about depreciation compensation. The other party's insurer is only offering €1,500 in depreciation compensation, when technically they shouldn't be offering anything at all. My car is worth 45,000-50,000 euros.
I believe that the damage done depreciated my car by much more than 1500 euros when it came time to trade in or sell. According to research and consultation with external experts, compensation for reduced value is usually 10-20 percent, which would be 1,874-3,748 euros.
The cost of repairs is approximately 40 percent of the cost of the car, which is a lot. An acceptable amount would be to meet in the middle, which I believe is 15 percent (€2,811).
The other side's insurer said this was their final offer and if I disagreed they would take it to the Financial Services Ombudsman. However, the ombudsman said that as I am not a consumer of the insurance company (be it a third party) they cannot deal with my complaint.
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I prefer to avoid the legal route because of the time and expense, and seek a fair and comfortable compensation for both parties.
Ah, the vagaries of insurance. As a sector, they have not been blessed with popularity, in part, I think, because of a serious problem with transparency.
The question of compensation for devaluation is not a subject that often comes up in this column, and I must admit that I was not quite prepared for your letter. It also goes by other names, usually called diminution in value.
Car Accident Depreciation Compensation
However, as a concept it certainly makes sense. While it's great that the insurance company has collected your car, the fact that it's been in a serious collision will inevitably affect its resale value.
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You are in an unusual position here. Due to your own fault, your car was involved in a collision that required at least €20,000 in repairs. Even after the repairs, you'll be out of pocket in the long run when you sell the car.
This is where the statement about the decrease in value arises. The idea is that he has to pay to make up the difference between the value of the vehicle before the accident and its value after it has been fully repaired after the accident. However, with my agreement, it is not actually calculated relative to the actual value of the vehicle, but as a percentage of the repair bill (before VAT is added).
You are looking for the insurance company to rely on what you understand to be industry practice to compensate you in some way for the inevitable devaluation of your car's value.
But as you've discovered, you're in no-man's land when it comes to asking for what you believe to be an unfair compensation offer.
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From talking to people in the industry, I understand that the rules for such diminution of value claims can vary greatly from country to country. But in Ireland, the general feedback you've received confirms that such compensation is usually calculated at 10-20 percent.
However, this depends on a number of factors - mainly the insurance company involved and, importantly in your case, the age of the car.
In general, the older the car, the less generous the insurer's assessment of the reduced value. Worse, once they're four or five years old, insurers can't process claims at all.
Car Accident Depreciation Compensation
This seems to be reflected in your case where you said the insurer told you that technically they shouldn't offer you anything under this heading at all.
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I understand why you are comforted by this. From the costs involved, it is clear that your car is not a regular or garden sedan, but a luxury car. The fact that it is five years old does not change the fact that it is a valuable asset. You say the resale value is around €50,000. It is not in vain to think that the history of participation in a serious accident can bring down 10 percent of this amount - about 5,000 euros.
Insurers are required under the Central Bank's Consumer Protection Code to ensure that any offer they make to settle a claim is fair, takes account of all relevant factors and represents their best estimate of the claimant's reasonable rights.
Generally, if someone disputes their insurer's assessment, there is a way for them to go to the Financial Services and Pensions Ombudsman - after they have exhausted the company's internal appeals system, but as you have found out, this is only available in the case of a dispute between the individual and their own insurance company, not third parties such as you, even if the insurer represents the person who caused the damage to your car.
The bad news is that if all negotiations with the insurer fail, your only option is to sue them. Considering you're talking about a 375 euro difference down the line, it's hard to see how the legal route makes sense. Even at the midpoint you suggested, the corresponding amount is only €1,300. This may be significant to you, but in terms of legal costs it is not, and there is no guarantee that you will win.
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And since you've told them you'd prefer to avoid the legal route, that rather puts the insurer in a difficult position.
However, before you give up completely, it may be worth asking one of the independent experts you have consulted to formally put their opinion on the loss on paper. Even if the insurer rejects the claim and stands its ground, a formal assessment of diminished value can help your case if you decide to go to court. But keep in mind that the cost of such an expert's opinion must also include any agreed compensation.
Please send your questions to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@. This column is intended for readers and is not a substitute for professional advice. There will be no personal correspondence
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Car Accident Depreciation Compensation
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Diminished Value And How To File A Claim
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