Maryland: Auto Insurers Must Pay Diminished-Value Claims in Hit-and-Run Accidents

Maryland drivers who get into accidents with uninsured drivers, or whose vehicles are damaged in a hit-and-run accident, can now recoup their repaired vehicle’s loss in value from their own insurance companies.

In April, the Maryland Insurance Administration notified insurers they must pay diminished-value claims through the state’s required uninsured/underinsured motorist coverage in cases where the at-fault driver lacks adequate insurance or is unknown.

Diminished value is the difference between how much a car is worth before and after an accident. Cars lose between 10% and 30% — or more — in value after an accident, even if they’ve been repaired with original manufacturer parts. That can add up to thousands of dollars lost when selling a used car. Now, drivers can recover some of the money.

How this protects insured drivers

Maryland is an at-fault state, so in an accident, the at-fault driver’s insurance pays out a diminished-value claim. But, if the at-fault driver is uninsured or unknown, the claim falls on the injured party’s insurance.

Approximately 14% of Maryland drivers are uninsured, according to the Insurance Research Council.

Previously, insurance companies could deny diminished-value claims for damages caused by an uninsured or unidentified driver. And some insurers worded their auto policies to exclude diminution-of-value claims from uninsured motorist coverage.

Now, uninsured motorist coverage includes diminished value under property damage, so insurers can’t deny a valid claim. And any insurers whose policies excluded diminished-value claims from uninsured motorist coverage must remove that language and refile their policies with the state’s insurance administration no later than July 11, 2024 — 90 days after the date of the administration’s notice to insurers.

What’s next? Submitting a claim

Cars lose anywhere from $500 to $2,100 on average after an accident.

Even if a vehicle is completely restored, the accident history will diminish the car’s value when trying to sell. A diminished-value claim can help mitigate that loss.

Often, insurers won’t suggest a diminished-value claim, so it’s up to the driver to collect the necessary information and submit a claim.

To submit a claim, drivers need to know the market value of their car and record the extent of the damage, the cost of repairs, and the mileage on the vehicle. After compiling the information, they should talk to an insurance agent to find out how much money they could receive. The payout will depend on the type of damage, whether it’s structural or cosmetic, and the extent.