Diminished Value Claims After a Car Accident (Complete Guide)

Even after your car is fully repaired following an accident, it is worth less than an identical vehicle that was never in an accident. This loss in value is called diminished value, and in many states, you can recover this loss from the at-fault driver's insurance company.

What Is Diminished Value?

Diminished value is the difference between what your vehicle was worth before the accident and what it is worth after repairs. Even with perfect repairs, a vehicle with an accident history is worth less than one without. This is because potential buyers are wary of vehicles with accident histories, vehicle history reports such as Carfax permanently record the accident, and there is a perception that repaired vehicles may have hidden damage.

Types of Diminished Value

Inherent diminished value is the most common type and represents the loss in value simply because the vehicle has an accident history, even with perfect repairs. Repair-related diminished value occurs when the repairs do not fully restore the vehicle to its pre-accident condition. Insurance-related diminished value occurs when the insurance company does not authorize sufficient repairs.

How to Calculate Diminished Value

The most common method is the 17c formula used by State Farm and adopted by many insurance companies. Start with your vehicle's pre-accident value. Multiply by 10 percent to get the base diminished value. Apply a damage multiplier of 0 to 1.0 based on the severity of damage. Apply a mileage multiplier of 0 to 1.0 based on the vehicle's mileage.

For a more accurate assessment, consider hiring an independent appraiser who specializes in diminished value claims. Their professional appraisal carries more weight with insurance companies and in court.

Average Diminished Value Amounts

Diminished value claims typically range from $1,000 to $10,000 for most vehicles. Luxury and high-end vehicles can have diminished value claims of $10,000 to $50,000 or more. New vehicles lose more value than older vehicles. Vehicles with structural damage lose more value than those with cosmetic damage only.

Which States Allow Diminished Value Claims

Most states allow diminished value claims against the at-fault driver's insurance company. However, the rules vary. Georgia is considered the most favorable state for diminished value claims due to a landmark court decision. Some states limit diminished value claims to third-party claims only, meaning you cannot claim diminished value from your own insurance company. A few states do not recognize diminished value claims at all.

How to File a Diminished Value Claim

Get your vehicle repaired completely. Obtain a diminished value appraisal from an independent appraiser. Write a demand letter to the at-fault driver's insurance company including the appraisal. Negotiate with the insurance company. If they refuse to pay, consider filing a small claims court lawsuit.

Conclusion

Diminished value is real money that you are entitled to recover after an accident that was not your fault. Do not overlook this component of your claim.

Use our free settlement calculator to estimate the total value of your accident claim.