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Can I Recover For The Lost Resale Value Of My Vehicle From The Insurance Company?

Over the years as a personal injury attorney in Los Angeles, clients have often asked me if they can recover the lost resale value (“market value”) of their vehicle after property damage arising from a collision. As is often the case in the law, the answer is “it depends.”

In this article, we discuss the circumstances that lead up to a loss of future resale value of a vehicle, the current law governing such cases, and what you need to know about this when purchasing an automobile insurance policy.

How does this situation arise?

Here is a typical case that leads up to this situation: The vehicle that you just purchased at current market value for, say, $20,000, is legally parked outside along the curb of your street. Another driver negligently hits your car, causing extensive property damage in the amount of $8000. The driver’s insurance does not deem your car a “total loss” (a total loss is when it will cost more to repair the damage than the market value), and they decide to pay for the repairs instead. Now, your vehicle is repaired and in the same condition as before the accident (often better condition.). However, because of the damage and repairs to the vehicle, the resale value is now $14,000 instead of the $20,000 you just paid for it. Can you recover the $6,000 difference?

Will the insurance company cover this?

Typically, the answer is no. The defendant’s insurance company is only liable for the actual damage to the vehicle, to put you back into the position you were in before the collision. Therefore, although they will have to pay for the repairs, and the rental car (at a reasonable daily rate for a similar vehicle), they are not liable for the loss of resale value for the car.

Likewise, if you had to file a claim against your own insurance under the uninsured/underinsured motorist portion of your policy (for instance, if you could not identify the negligent driver in order to make a claim against him, such as a “hit-and-run“), your own insurance company will not be liable for loss of resale value either. The California Court of Appeals recently held in Baldwin v. AAA N. Cal. that an insured’s policy expressly stating that the insurance company is not liable for loss of “market value” of the car is valid. In doing so, the court stated that the express language in the contract excluding such loss from the policy coverage overrides the public policy argument that there is an implied promise to deal fairly and in “good-faith” with a customer. Accordingly, the plaintiff in that case was not able to recover from his insurance policy for the lost resale value after the damages had been repaired.

What should I know?

What should you know when you purchase an automobile policy? First, check the language of the policy to see if it expressly (by its written terms) excludes coverage for loss of resale value. Chances are that most insurance policies do not cover this sort of loss.

Next, realize that this only applies to damages covered by repair, and not to “total loss” of the vehicle. In a total loss, the insurance company will be required to pay you for the current market value of your car at the time of the collision. We always argue for total loss when possible in order to prevent loss of resale value of a damaged vehicle.

Also, if you purchased the car with a loan from the dealer or the bank, and are making payments on the vehicle, realize that such a loss in resale value will often put you “upside-down” in the loan, meaning that you owe more on the loan than the car is worth if you were to sell it. The best way to prevent this from happening is to purchase GAP Insurance, which will cover the difference in the amount owed on the vehicle to the finance company and the resale value of the car.

Finally, it is important to have an experienced attorney on your side. For over 30 years, the Law Offices of Vann H. Slatter have been negotiating with insurance companies to get their clients the compensation they deserve. If you or someone you know has been injured as the result of another’s actions, please call us today for your free consultation at (310) 444-3010 or toll-free at  (888) 293-0404.