Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure .
Your car typically loses value after an accident even if it’s been fully repaired, it’s known as “diminished value.” After all, if you’re a potential buyer comparing two identical cars available for the same price, would you pick the one that’s been wrecked or the one that’s accident-free?
Depending on where you live and who caused the accident, you may have the option to file a diminished value claim with your insurance company to regain some of the value your vehicle lost following the accident.
Learn more: How does car insurance work? The basics explained
Three types of diminished value
There are three primary types of diminished value.
Inherent diminished value
Inherent diminished value is the drop in the perceived value of a vehicle simply because of its involvement in an accident, even if it’s been fully repaired to its pre-accident condition.. Because accidents are reported on your vehicle’s Carfax history, they’re almost guaranteed to reduce the car’s market value. This is the most common type of diminished value claim.
Repair-based diminished value
Repair-based diminished value occurs when your vehicle cannot be perfectly repaired and restored to its original condition following an accident. This may be due to a lack of available parts or subpar work by the repair shop. . Even without a change in functionality, these lower-quality repairs or parts will depress your vehicle’s market value.
Inherent diminished value
Inherent diminished value is the loss in value that occurs immediately after an accident before the vehicle is repaired. This type of diminished value claim is rare.
Learn more: What to do after a car accident: Your step-by-step guide
When to file a diminished value claim
You can often file a diminished value claim if all of the following are true:
-
Your vehicle was less than 10 years old, with reasonable mileage, and in good condition prior to the accident
-
The other driver was at fault in the accident, or it was a hit-and-run accident and you have uninsured motorist coverage
-
You did not sign a release of liability that applies to the accident
-
Your vehicle suffered major damage in the accident
-
The insurance company did not declare your car a total loss
Also, states set statutes of limitations on filing diminished value claims. They are commonly between two and six years from the accident date.
When a diminished value claim may not be worth it
Dealing with insurance companies and appraisers takes time and energy. The potential payout for a diminished value claim is usually limited to 10% of the car’s value. You may not want to bother filing a claim if:
-
Your vehicle is older or has high mileage
-
You were at fault in the crash
-
Your state or the driver’s insurance company doesn’t allow diminished value claims
-
The damage to your vehicle was minor
Learn more: How much does car insurance increase after an accident?
How to file a diminished value claim
You’ll typically file a diminished value claim with the at-fault driver’s insurance provider. If your diminished value claim is approved, the insurer pays you cash as compensation for your car's reduced market value.
Follow these five steps to file a diminished value claim.
Step 1: Contact the at-fault driver’s insurance
First, you’ll work with the at-fault insurance company to repair your vehicle after the accident. You’ll need to file a car insurance claim promptly, comply with all requests from the insurance company’s adjuster, and meet any deadlines for documentation and information. Let the insurance adjuster know that you plan to file a diminished value claim.
Step 2: Research your car’s value before the accident
Kelley Blue Book (KBB), NADA , and Edmunds are popular car-value resources. Collect at least two private party value estimates for your vehicle based on its value before the accident. Working with a professional appraiser can also be helpful.
Step 3: Calculate the diminished value with the 17c formula
As we’ll explain more below, the 17c formula is a standard, accepted formula for calculating a vehicle’s value loss after an accident. You can also opt to get an appraisal, which can be useful if the insurer does not agree with your diminished value calculations.
Step 4: File your claim
After you’ve gathered the necessary documentation, you can file the diminished value claim with the other driver’s insurance company. Your claim amount is the loss of the car’s resale value that occurred because of the accident. Submit all information you have gathered to support that amount. This should include your calculations and valuations or appraisals. The insurer will review and respond. If you’re not satisfied with the settlement offer, you may need to provide more supporting evidence.
Learn more: What is the actual cash value of my car? Here’s what to know .
How to calculate diminished value with the 17c formula
The 17c formula is a common formula insurers use to quantify the value of a diminished value claim. Follow the steps below to calculate diminished value with the 17c formula:
Calculate 10% of your car’s value
Insurers usually cap diminished value claims at 10% of the car’s market value based on KBB or NADA estimates. So if you have a $40,000 car, the maximum payout would be $4,000. This number is sometimes called the base loss value.
Adjust with the damage multiplier
Next, you’ll estimate the level of damage that occurred and apply with the appropriate multiplier. Sticking with the example of a $40,000 car, suppose the crash resulted in major damage. You’d multiply the base loss value ($4,000) by 0.75 (the multiplier that corresponds with major damage), which equals $3,000.
Use the table below to select a damage multiplier value. These only consider structural damage, not mechanical or cosmetic damage.
| Multiplier |
Damage Level |
| 1.00 |
Severe structural damage |
| 0.75 |
Major damage to structure and panels |
| 0.50 |
Moderate damage to structure and panels |
| 0.25 |
Minor damage to structure and panels |
| 0.00 |
No structural damage or replaced |
Adjust with a mileage multiplier
Next, you will adjust for the vehicle’s mileage. The table below lists the mileage multipliers.
| Multiplier |
Mileage Range |
|---|---|
| 1.00 |
0-19,999 miles |
| 0.80 |
20,000-39,999 miles |
| 0.60 |
40,000-59,000 miles |
| 0.40 |
60,000-79,999 miles |
| 0.20 |
80,000-99,999 miles |
| 0.00 |
100,000 miles or more |
Continuing with the $40,000 car example, let’s assume the vehicle has 50,000 miles. You would multiply 0.60 by $4,000, which is the value after applying the damage multiplier. The result is a max diminished value claim of $2,600.
Diminished value calculators
A diminished value calculator can be a helpful resource for determining the value of your claim. Here are three options to try:
-
AppraisalEngine : AppraisalEngine, which provides car appraisals, lets you estimate the amount of your diminished value claim by providing your vehicle identification number (VIN) and estimating the scope of the damage.
-
The National Association of Diminished Value Appraisers (NADVA) : NADVA, a network of professional appraisers, has a diminished value calculator that requires detailed information, including your car’s make and model, transmission and mileage, as well as details about the crash, like where the point of impact occurred and whether the airbags deployed. After you provide your contact information, NADVA will email you an estimate and provide a recommendation on whether you should work with an appraiser or file a DIY claim.
You can use the estimates from these diminished value calculators in addition to your own 17c calculations and appraisals you collect.
Negotiating a diminished value claim
The insurance company may not agree with your claim amount. This can happen when:
-
You and the insurer disagree on the damage level
-
The insurer does not use the 17c formula
Some insurers may rely on other methods to determine diminished value. These include market comparisons and professional appraisals.
If the insurer does not agree with your diminished value assessment, your claims adjuster may make a counteroffer or ask you to produce more inspections and evaluations. You can fulfill the requests and attempt to secure a higher offer yourself, or hire a lawyer to negotiate for you.
Negotiating a diminished value claim on your own
To secure a higher diminished value claim, comply with all information requests from the insurer, stay focused on value, and supply as much documentation as you can.
-
Comply with information requests:The insurer may ask you to supply more photos, calculations, valuations, etc. Although it may be tedious, fulfill these requests.
-
Stay focused on value:In your conversations with the claims adjuster, keep the conversation focused on how your car’s value has changed. It might be tempting to talk about the work you’ve missed or injuries you’ve sustained from the accident, but those claims are separate issues.
-
Document your position with third-party reports:You may need to collect multiple appraisals to convince the insurer that your number is fair.
If your repair-based or inherent diminished value claim is disputed or you cannot come to an agreement on the settlement amount, most states allow you to request mediation or arbitration through a third party. If you are working with an attorney, you can also opt to take the case to trial.
Learn more: How and when to file a complaint against your car insurance company
Pros and cons of hiring a lawyer
Depending on the complexity of your case, you may choose to hire a lawyer to help navigate negotiations around the diminished value of your vehicle and your settlement.
Personal injury attorneys are well-versed in negotiating with insurance companies to get the best possible settlement. If you’re already working with an attorney for a personal injury or property damage claim, they may also be able to help with your diminished value claim.
Be aware that many car accident attorneys charge a fee on contingency (meaning, if you win) that’s equal to one-third of your recovered damages. Even if they are willing to charge a flat rate for their services, you may not recover enough extra (on top of whatever the carrier is already offering) to warrant the attorney’s fee.
Diminished value claims FAQs
Can I file a diminished value claim if the other driver has no insurance?
If the at-fault driver is uninsured, you may be able to file a diminished value claim through your uninsured motorist coverage. Note that this option is not available in every state.
Can I file a diminished value claim if I caused the accident?
Most providers exclude diminished value reimbursement for at-fault parties. So if you were responsible for a wreck, you are unlikely to get a diminished value settlement even though your vehicle may be worth less after repairs.
Should I hire a lawyer to help with my diminished value claim?
Lawyers are skilled at negotiations, but they also charge fees. You must assess whether the lawyer can raise the insurer’s offer enough to cover the extra fees. Note that some lawyers will only accept diminished value claims if they are also representing you in a personal injury case resulting from the same accident.
Tim Manni edited this article
