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Q

In the state of Alabama, if an act of god causes damages to your automobile, is the insurance company responsible for any depreciation caused by the accident?


A

The concept you are asking about here is actually referred to as a diminution of value or diminished value. It means that after your car is repaired following an accident you want compensation for the loss of value of your vehicle, because even if the repair shop did an amazing job repairing your vehicle, it's going to have a lower resell value because of its accident history.

Car insurance policies are typically written in such a way that your insurance company isn't responsible for the depreciation of your vehicle when you make a first-party claim (a claim with your own insurer). It doesn't matter if the claim is due to you running into another car or damage from an act of God, such as a hail or wind storm.

State laws vary regarding diminished value. The Alabama Department of Insurance says that their state doesn't have a diminished value law, but it does allow car insurance companies to place language in the policy that excludes first-party claims for diminished value.

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Even without a specific law in place, Alabama courts have previously ruled that physical damage policy terms are such with most polices that the insurer is required to restore a car to the same basic physical and operating condition it was in before the accident, but don't require the insurer to restore the vehicle to its pre-accident value or restore that value to its owner.

All in all, this means that it's up to your car insurance company, according to the terms of your policy (that you are bound to), if they will pay out for the diminution of value for your car that was damaged by an act of God.

You, should ask your insurance provider about diminished value when you make a comprehensive claim for your damage. Likely the answer will be they don't pay out for diminished value, but you won't know for certain until you ask.

If your agent is not able to explain to you what to do in this situation or fulfill your car insurance needs, contact a CarInsurance.com agent and they can explain not only insurance terms and explain claim procedures but also tell you how they can get you low cost car insurance.


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