How Much Does a Vehicle Depreciate After an Accident? 

an aerial view of a car accident

Automobiles are essential for most people. Owning a passenger vehicle enables people to commute to work, run errands, and enjoy recreational and social outings. The fact that over 282 million vehicles were registered in the U.S. in 2021 demonstrates how much value people place on vehicle ownership. 

Vehicle purchases are also among the most expensive purchases most people make. Despite people’s hefty financial investment, vehicles lose value over time. Being in a car accident can also cause a vehicle’s value to depreciate. If you’ve been in an accident, you may wonder how the accident impacts your vehicle’s value and the factors that affect that diminished value.

What does depreciate mean?

Depreciation refers to the decline in something’s value. Some things appreciate over time, while others depreciate. Whether an asset appreciates or depreciates depends on multiple factors, such as:

  • Availability
  • Demand
  • Economic factors

Although antique or collector cars may increase in value over time, most vehicles depreciate or lose value. Their value depreciates when you buy them, and the longer you own a vehicle, the more it depreciates. 

How much does a car depreciate per year?

Although vehicles lose value over time, the depreciation rate varies. Several factors determine how much value the vehicle loses. 

Suppose you purchased two new vehicles on the same day. You bought one vehicle made by a car manufacturer with an excellent reputation. That vehicle has a high safety rating. The second car’s manufacturer has a decent reputation; however, the vehicle doesn’t enjoy the same high safety rating as the first car. Based on those factors alone, the second vehicle would depreciate faster. However, if the first car is a luxury car that’s expensive to maintain, its depreciation rate would increase.

Other factors could increase or decrease the depreciation rate of both cars. These factors include the following:

  • Gas mileage – Vehicles that get more miles per gallon retain more value than those with poor gas mileage.
  • Maintenance – Investing in routine maintenance helps maintain your vehicle’s value.
  • Miles driven – Vehicles with low odometer readings retain more value than those with high odometer readings. You can preserve your vehicle’s value by limiting how much you drive it.
  • Wear and tear – Preserving your vehicle’s appearance will reduce its depreciation. For example, some people invest in seat covers and floor mats to prevent stains. 
  • Vehicle accidents – Motor vehicle accidents (MVAs) reduce the resale value of damaged vehicles. 

Does a car lose value after an accident? 

A vehicle loses value after it’s been in a car accident. Depending on the severity of the damage, car accidents can affect the vehicle’s structural integrity. Structural damage can reduce the car’s safety rating. In some cases, damage from an accident can also trigger other mechanical issues. 

What causes MVAs? 

More than 4.7 million cars and 3.8 million light trucks were involved in MVAs in 2020, representing an average of over 23,000 vehicles involved in accidents every day. The most common causes of MVAs include the following:

  • Distracted driving – Anything that takes your focus off the road is distracted driving. Examples include conversing with a passenger, using your cell phone, or eating while driving. 
  • Driving under the influence – Consuming alcohol and using illegal, legal, or prescription drugs can cause impairment. When people drive while impaired, they have reduced response times and lack the judgment needed to drive safely. 
  • Speeding – Driving faster than the posted speed limit reduces the time available to adjust for changes in road conditions. It takes longer to stop vehicles moving faster, increasing the likelihood of a collision.

Other causes of MVAs include the following:

  • Fatigue – Driving when you’re tired reduces response times. 
  • Reckless driving – Reckless driving means driving aggressively. Examples of reckless driving include passing on the shoulder or tailgating other vehicles.
  • Weather – Heavy rain, snow, and fog reduce visibility and response times, increasing your chances of being in an accident. Icy roads and excess water on roadways can also cause you to lose control of your vehicle.

How much value does a car lose after an accident? 

The amount a vehicle depreciates after a car accident depends on the severity and nature of the damage. How much does a minor accident affect car values? A minor accident could result in $500 or less in lost value. However, severe accidents could cost you thousands in diminished value.

Does who’s at fault affect your vehicle’s depreciation after an accident?

Suppose a motorist strikes your vehicle while backing up, and the investigation determines they are at fault. Unfortunately, the diminished value incurred would be the same no matter who caused the accident. Whether you’re at fault or not will impact whether your insurance rates increase after the accident. At-fault drivers typically pay higher rates following MVAs. 

Is there a way to receive compensation for the diminished value after a car accident?

You can file an accident insurance claim to cover the cost of repairs after your accident. You can also submit a claim for the diminished value. You’ll need to have your vehicle repaired first and have it appraised. Deduct the vehicle’s value after it’s repaired from its value before the accident to determine the diminished value amount you can claim.

Can a car accident attorney help you recover diminished value after your accident? 

a gavel sitting next to a stack of books

A car accident lawyer fights to protect your rights and seeks compensation for property damage and vehicle depreciation costs incurred after an accident. At Jack Bernstein, Injury Attorneys, we’ll investigate the accident, gather relevant materials, file legal paperwork on your behalf, and negotiate with the at-fault driver and their insurance company. We won’t charge any legal fees until you receive the compensation you deserve.


D’Allegro, J. (2022). Investing in Collectible Cars: Top Tips and Risks.

Keegan, M. (2021). Understanding Diminished Value Claims After an Accident

Number of motor vehicles registered in the United States from 1990 to 2021. (2023). 

Number of vehicles involved in traffic crashes in the United States in 2020. (2023). 

Thakor, M. et al. (2010). Five Expenses That Will Consume 50 Percent of Your Lifetime Earnings.

What is Car Depreciation? (2023).

The information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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