Diminished Value Claims After an accident, a vehicle’s value can decrease significantly, even if it was repaired correctly. If you’re the owner of a car involved in an accident where the other driver was at fault, you may have to bear the difference between your car’s current value (post-repair) and what it would have sold for before the incident. This situation is called diminished value, and it can be challenging to navigate. Some insurance policies offer coverage for diminished value, while others do not. It’s crucial to understand your policy and consult with legal experts if necessary to ensure that you receive fair compensation for any losses incurred due to an accident. In some cases, you may be able to file a diminished value claim to recoup the loss to your vehicle’s value due to the accident—even if you aren’t planning to sell your car in the near future.

What Is a Diminished Value Claim?

A diminished value claim allows you to recover the difference between your car’s pre-accident value and its value after the repairs from the car insurance company of the at-fault driver.

When your car is damaged in an accident, the market value of the vehicle typically drops—even after repairs are made to restore it to its original condition. That means your car is worth less, even in pristine, post-repair condition, than an identical vehicle that has not been in an accident. The vehicle will now likely sell or trade for less than it otherwise would have.

There may be a way to avoid financial loss due to diminished value. In certain cases, you may be eligible to file a diminished value claim to recoup the value that the vehicle lost after the accident. By filing this type of claim with the insurer of the at-fault driver, you’re able to recover the difference between what your vehicle was worth before and after the accident.

Types of Diminished Value Claims

When a vehicle is involved in an accident, there can be three types of diminished value claims: immediate, inherent, and repair-related. Immediate diminished value refers to the reduction in the car’s worth immediately after the accident. Inherent diminished value refers to the loss of value due to the fact that the vehicle has been in an accident even after it has been repaired. Repair-related diminished value refers to any further reduction in value due to improper repairs or parts used during the fixing process. It is important to understand these different types of diminished value claims when seeking compensation for a damaged vehicle.

Immediate diminished value

Immediate diminished value claims are designed to help vehicle owners recover the loss in resale value that occurs right after an accident or before a car has been repaired. This type of claim is usually filed in court and is not commonly used elsewhere. It can be challenging to prove the immediate drop in value, but it is possible with the help of expert appraisals and documentation. It’s important to note that this type of claim only covers the immediate loss in value and not any future depreciation. Therefore, it’s crucial to act quickly and file your claim as soon as possible after the accident or damage occurs.

Inherent diminished value

Following an accident, a vehicle’s market value will decrease even after being repaired. This reduction in resale value means that the car will not fetch as much as it could have before the accident. This is where the concept of an inherent diminished value claim becomes relevant. As the repaired vehicle is now worth less to prospective buyers, certain car owners may opt to file a claim for inherent diminished value, which represents the disparity between the car’s present value and the amount it could have been sold for if it had not been in an accident.

Repair-related diminished value

In the event that inadequate repairs are performed on a vehicle after an accident, preventing it from being restored to its original state, there may be a chance to submit a claim for diminished value related to the repairs. For instance, the repair facility might have utilized subpar components instead of original equipment manufacturer (OEM) parts when conducting the repairs. Alternatively, there could be concerns regarding the quality of the paint. Such repair-related problems can lead to a decrease in the vehicle’s value, allowing you to seek compensation for the diminished value.

Who Can File a Diminished Value Claim?

Filing a claim for diminished value can be an effective way to recover losses after an accident, provided that you meet specific requirements and your car meets certain criteria. One of the qualifying factors is the age of the vehicle; typically, cars that are less than 10 years old are eligible for diminished value claims. Another critical factor is the extent of damage caused by the accident; if it resulted in significant structural or cosmetic damage, then you may have a strong case for filing a claim. Additionally, having documentation that shows the car’s pre-accident condition and value can bolster your claim and increase your chances of receiving compensation. It is advisable to consult with an experienced attorney who specializes in diminished value claims to guide you through the process and ensure that you receive fair compensation for your losses.

The other party was at fault

In the event of filing a diminished value claim, it is crucial to establish who was responsible for the accident. If you were at fault, you are typically unable to file a diminished value claim against your own insurance policy. However, if the other party is found liable, you may be eligible to file this type of claim with their insurer and receive compensation for the decrease in your vehicle’s value. It is important to note that not all states recognize diminished value claims, so it’s important to consult with an experienced attorney or insurance adjuster for guidance on how to proceed. Additionally, having documentation such as accident reports and repair estimates can help support your claim and increase your chances of receiving a fair settlement.

You own the car

It is generally not possible to file a diminished value claim on a leased vehicle. This is because the lessor, or the company that owns the vehicle, retains ownership of the car throughout the lease term. As such, any loss in value due to an accident or damage would be borne by the lessor rather than the lessee. However, it’s always a good idea to review your lease agreement and insurance policy to understand what options are available for you in case of an accident or damage.

You own a high-value vehicle

To file a claim, your vehicle must meet certain criteria. If it is under 10 years old and has not been involved in any accidents before the current incident, you may be eligible to file this type of claim. However, it’s important to note that insurance companies have their own set of rules and regulations for filing claims. It is always advisable to check with your insurer regarding their specific requirements before proceeding with a claim.

You meet title requirements

Unfortunately, if your car title is classified as rebuilt or salvage, you will not be eligible to file a diminished value claim. This is because insurance companies consider these types of titles as indicators that the vehicle has been severely damaged or involved in a major accident. As a result, it is assumed that the car’s value has already been reduced and cannot be further diminished. However, it is still important to consult with your insurance provider to understand your options and ensure you have the appropriate coverage for your vehicle.

The other party was uninsured

In the unfortunate event of an accident where an uninsured or underinsured driver is at fault, you may be eligible to file a diminished value claim with your insurance provider under your own uninsured motorist property damage coverage, provided that you have it. Such coverage ensures that you are protected from financial loss in case an at-fault driver lacks adequate insurance coverage to pay for the damages incurred. Filing a diminished value claim can help you recover the difference between the pre-accident and post-accident value of your vehicle after it has been repaired. It is essential to consult with your insurance provider and seek professional guidance to understand how to best navigate this process.

You live in a state that allows it

If you’re considering filing a diminished value claim after a car accident, it’s important to understand that the rules and requirements for such claims can vary by state. Generally, most states mandate that the other driver has to be at fault for you to file a claim. However, in Georgia, you can proceed with a diminished value claim regardless of who was responsible for the accident. This means that even if you were partly at fault, you may still be able to recover some compensation for your vehicle’s reduced value due to the accident. It’s always best to consult an experienced attorney who specializes in diminished value claims to determine your rights and options under the specific laws of your state.

How Is Diminished Value Calculated?

Most insurance companies use a standard calculation called the 17c diminished value formula to determine the value of a vehicle after it’s been in an accident.

17c diminished value formula

Value of the vehicle x 10% cap x damage multiplier x mileage multiplier = Diminished value

If you’re wondering how to use the same formula to determine the diminished value of your vehicle, here are the steps to follow.

1. Use an online calculator to determine your vehicle’s value

Two online resources, the National Automobile Dealers Association (NADA) and Kelley Blue Book (KBB) websites, provide calculators for determining your car’s value. The calculators require basic information such as the vehicle’s make, model, year, and mileage, as well as a clear understanding of the extent of any damage to the vehicle in order to obtain an accurate valuation.

2. Calculate the base loss of value

After determining your vehicle’s worth, you must factor in the base depreciation to the estimated sales value provided by NADA or KBB. The 17c formula calculates the base depreciation at 10% of the car’s value. This 10% limit is frequently used by insurance companies and represents the maximum payout you can anticipate from your insurance claim.

3. Adjust the vehicle’s value with a damage multiplier

Next, you’ll need to modify the vehicle’s value to account for any structural damage it sustained. To accomplish this, multiply the previously calculated value by a number between 0.00 and 1.00. This number corresponds to the extent of the structural damage sustained in the accident. Refer to the table below for the appropriate multipliers based on the damage severity.

Level of damage to vehicle	Damage multiplier
Severe structural damage to vehicle	1.00
Major damage to the vehicle’s structure and panels	0.75
Moderate damage to the vehicle’s structure and panels	0.50
Minor damage to the vehicle’s structure and panels	0.25
No structural damage to vehicle (cosmetic only)	0.00

4. Calculate the mileage multiplier

The vehicle’s mileage was taken into account during the initial valuation. However, it will be used again as the final step in determining the diminished value of the vehicle. This step discounts the diminished value of the vehicle based on the mileage.

In order to determine the value of your vehicle with the mileage multiplier discount, the vehicle’s value calculated in the step prior is multiplied by one of the following numbers based on its mileage.

What a Diminished Value Calculation Looks Like

Suppose you had a car valued at $10,000 according to KBB or NADA estimates and it was involved in an accident that caused significant damage to its structure and panels. Based on the table, the damage multiplier would be 0.75, and the mileage multiplier would be 0.40 due to the vehicle having 68,000 miles on it. Using the 17c diminished value formula, the calculation for this vehicle would appear as follows.

• Vehicle value: $10,000
• Base loss of value: $10,000 x 10% = $1,000
• Damage multiplier: $1,000 x 0.75 = $750
• Mileage multiplier: $750 x 0.40 = $300
• Diminished value: $300

Can diminished value be negotiated?

If you believe the diminished value of your vehicle is lower than expected, or if you think the insurance company’s calculation is incorrect, you may be able to negotiate for a higher diminished value. Before making a counteroffer, conduct thorough research. Compile a list of your car’s unique features, obtain the estimated value from a source like NADAguides, and look at online platforms such as Autotrader for similar car sales in your area. You can also ask for an independent assessment of the damage to your vehicle and present an estimate detailing the full extent of the accident-related damage. By having a third party physically inspect and document the damage to your vehicle, you may have more leverage when negotiating with the insurance company, potentially resulting in a higher diminished value payout.

Diminished Value Claims Faqs

How long do I have to file a diminished value claim?

Diminished value claims are subject to specific state rules, which include the statute of limitations dictating the time frame for making a claim. Typically, most states permit a two-year window for filing a diminished value claim, but it is advisable to do so promptly after the vehicle repairs are completed.

Is it worth filing a diminished value claim?

Filing a diminished value claim can be worth it if you meet your state’s requirements. These typically include that the accident was the other party’s fault and you own a high-value vehicle with low mileage and no previous accident history.

Qualifications for filing a diminished value claim vary by state, but even if you are able to file, the insurer may not be required to pay. In Texas, for example, the insurer is not obligated to pay for diminished value when a car is completely repaired to its pre-accident condition.

Will my insurance company pay a diminished value claim?

Typically, your insurance company will not cover a diminished value claim for your vehicle if it is in an accident. However, if you can demonstrate that the damage from the accident reduced your car’s value, you can pursue a diminished value claim against the at-fault party’s insurance. There are instances, though, when your insurance company might compensate for the diminished value, such as in the case of an accident with an uninsured driver where you have uninsured motorist coverage.