Question: The insurance company of the driver that caused damage to my vehicle will pay only “book value.” My vehicle is not totaled and is mechanically the same as before the accident. This situation will leave me "not whole," since the damages in my opinion exceed the book value. Can I sue in small claims court for the difference?
Answer: Insurance companies look at car accidents from a financial perspective. Once it becomes more economical to total out a car rather than repair it, they will do so. Unfortunately, you don’t have a say in that decision, even if you disagree with the insurer’s assessment and think that damages exceed the car’s value.
After an auto accident, insurance companies try to place you back into the same position you were in before your loss; this is referred to as “being made whole.” This is done by repairing the car to its pre-accident condition or paying the car's owner the car’s actual cash value (ACV).
All car insurance companies will pay only up to a vehicle’s ACV, which you call “book value,” because this was the worth of your vehicle at the time of the incident. An owner paid the value of his car is theoretically back in the same financial situation as before the accident.
If your car has already been repaired, then you have been made whole in the eyes of the other party’s insurance company and can't sue for the value of the car. However, if you feel as if your car has lost some of its market or resale value due to the accident, then you can attempt to claim (or sue) for the diminished value of your car.
Many car insurance policies don’t allow requests for diminished value with claims against your own policy, but since you made a third-party claim you don’t have a contract with that insurer, and this means that state laws will determine if you can make such a claim.
If you want to ask for compensation due to perceived diminished value of your vehicle, I’d recommend that you first check with your state’s insurance regulator to see if such a claim is possible in your state. If it is, then you’ll need to submit proof of the alleged loss of value to the insurer and negotiate from there.