How much does a major accident affect a car's value?

Updated February 21, 2017

Poorly designed highway infrastructure and an ever-increasing population are leading to clogged roadways and undesirable driving habits. According to Bankrate, a major accident creates a loss in a car's value of up to 18 per cent. This loss is referred to as "diminished value" and is affected by different components.

Market Value

The value of a car before the accident is a key component in determining your economic loss from an accident. The more expensive the car, the larger the loss in value is likely to be. Luxury automobiles often take the biggest hit to value after a major accident because of its steep purchase prices.

Time Frame

The age of your car combined with the number of miles driven factor into determining the value of your car. A new car's value begins to drop as soon as you make the purchase. The largest decreases occur in the first three years of ownership. For most cars, a major accident during this time creates a larger decrease in value than if the accident happens after the initial three-year period.


Even though the sales price of automobiles continues to rise, consumers don't keep cars as long as they used to. Because many consumers finance their cars with little or no down payment, getting the best possible price on a trade-in or sale becomes a key factor to upgrading to a new vehicle. Most insurance companies report accidents to an accident reporting service. That information is available to automobile dealers and individual consumers.


The most important factor in determining your economic loss after a major accident is the extent and type of damage to the car. Structural damage, or damage to the frame, creates more loss to a car's value than any other type of damage. The extent of the damage is reflected in the cost of repair. The cost of the repair in relation to the car's value before the accident is a huge factor in determining economic loss. A car worth £39,000 that sustains £6,500 worth of damage in an accident will likely not lose as much value as a car worth £13,000 that sustains the same amount of damage.

Expert Insight

Car owners have the right to file a diminished-value claim against a third-party insurance company to recoup the lost value of the car. Companies specialise in providing diminished-value appraisals. You can also file a diminished value claim against your own insurance company if you are hit by an uninsured motorist and carry uninsured motorist coverage.

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About the Author

Kaye Morris has over four years of technical writing experience as a curriculum design specialist and is a published fiction author. She has over 20 years of real estate development experience and received her Bachelor of Science in accounting from McNeese State University along with minors in programming and English.