Diminished Value in Louisiana

Louisiana is a diminished value state.  This is an important thing to know and understand if you are ever in a car accident or experience other damage to your vehicle.  If your car sustains enough damage it may be declared a total loss.  Knowing your rights and your options in these circumstances can save you a lot of money, time, and frustration.  Here is everything you need to know about diminished value and total loss.

What is Diminished Value?

Diminished value is the difference between what your car was worth before an accident, and what is worth after.  There are three types of diminished value categories. 

  • Immediate diminished value – The difference in the trade-in or resale value before the accident and after the repair.

  • Inherent diminished value – The assumption is made that the vehicle has been repaired to its original condition. It will only be noted that it was in an accident.

  • Repair-related diminished value – The diminished value is a direct result of the repair facility. After market parts, non-matching paint, and other repair related mistakes drastically reduce the vehicle’s value compared to before the accident.

What is a Diminished Value Claim?

A diminished value claim is a claim you make with an insurance company to be compensated for the value lost due to an accident.  These claims are more likely to be approved if were not at fault in the accident. 

What Determines if You are Eligible for a Diminished Value Claim?

In Louisiana there are several factors that will determine if you qualify for a diminished value claim. 

  • Your vehicle is not a total loss.

  • Third-party negligence.

  • Proof that your vehicle’s loss of value is a direct result of the accident.

  • Your vehicle’s value before the accident.

  • Your vehicle’s resale value after repair.

  • Your vehicle’s current mileage.

  • The number of accidents that your vehicle has been in.

  • If your vehicle is considered a luxury vehicle.

What is a Total Loss?

In Louisiana your vehicle is considered a total loss if the cost of repair equals or exceeds 75% of its market value. 

What is Actual Cash Value?

The actual cash value of your vehicle is what you could sell it for immediately before the accident occurred.  If the cost of repair exceeds 75% of this cash value, it will be declared a total loss.

How is Total Loss Calculated?

Insurance companies consider a variety of factors when calculating the actual value of your vehicle, this, in turn, will allow them to determine what the total loss threshold will be. 

  • Year

  • Make

  • Model

  • Mileage

  • Physical condition

  • Wear and tear

  • The type of damage caused in the accident

What are your Options if Your Vehicle is Declared a Total Loss?

If your vehicle is declared a total loss you have a couple of options.  The insurance company can pay you the cash value of your vehicle, or you can choose to keep it.   Depending on your situation and the severity of the damage, you may decide to keep your vehicle while still being compensated for its cash value.  If you opt to keep your vehicle the insurance company will pay you for the cash value, minus what they would be able to get for it at a salvage auction.  This is known as “buying back”.  At this point making any repairs will be up to you, but you will remain in possession of your vehicle. 

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