Diminished Value Claim: What It Is & How To File (2025)

What Is Diminished Value?

Diminished value is the difference in the market value of your car before the accident and after repairs were made. The person who hit your vehicle should make you “whole” through insurance. That could mean returning your car to its market value before the accident.

However, that’s not the case.

Consider if you were in the market to buy another car and you had your eye on two cars that looked the same, except one showed up in an accident report. Which one would you buy?

With millions of cars involved in accidents each year, neither private car buyers nor car dealers are willing to pay market value for cars damaged and repaired. Private buyers typically walk away, and dealers often offer you less than you believe your car is worth.

How Does Diminished Value Work?

There are three types of diminished value:

Immediate Diminished Value

This is the difference in market values of your vehicle before it is damaged and immediately after it is damaged — before repairs.

Inherent Diminished Value

This is the difference between the market value of your vehicle before an accident and its market value after repairs. This is based on your vehicle showing an accident history in a reporting agency’s database.

Repairs can restore your car to like-new, but the accident report can drop its value. This is the most common type of diminished value and the one insurance companies may pay you for.

Repair-Related Diminished Value

This loss in market value is based on less-than-perfect repairs made to your vehicle. It could be as simple as repair paint not matching the original. An insurance company is not likely to compensate you.

Typically, diminished value claims are only filed for inherent diminished value.

What Is a Diminished Value Claim?

With over 15,000 crashes per day in the U.S., diminished value claims are important for American drivers to understand. A diminished value claim is filed with the insurance company of the driver who damaged your vehicle.

You file your claim after the at-fault driver’s insurance company has paid for your car repairs. If you’re successful, the insurance company writes you a second check, sometimes referred to as a car insurance depreciation check.

Who Is Eligible to File a Diminished Value Claim?

Generally, drivers in auto accidents where they weren’t at fault may file diminished value claims against an at-fault driver. Each state has its own regulations surrounding filing a claim, but notably, Michigan drivers may not file diminished value claims.

Factors to Consider When Pursuing a Diminished Value Claim

Here are five key questions to answer to know if you want to pursue a diminished value claim:

• Was the other driver at fault?
• Do you own or finance your vehicle? (No leases)
• Is your vehicle less than seven years old?
• Does your vehicle have less than 100,000 miles?
• Does your vehicle have a clean accident history?

If you answer yes to these questions, a diminished value appraiser may provide you with a diminished value estimate so you can decide whether you want to pursue a claim.

How Insurance Companies Handle Diminished Value Claims

After car accidents, insurance companies are generally required to pay claims unless they can reasonably prove they aren’t responsible. This is true for diminished value claims as well.

As with any other kind of claim, you must usually provide proof of your car’s diminished value. Some examples of possible evidence you may use include:

• Your vehicle history report
• Photos of your car before and after the accident
• Expert appraisals of your car’s current value
• Invoices for car repairs

If you are having trouble getting your claim approved, an attorney may be able to offer advice and guidance. If need be, a lawyer also may be able to negotiate with the insurance company on your behalf.

How to File a Diminished Value Claim

To receive a settlement from an insurance company, the burden of proof rests fully on you. Insurance companies routinely deal with diminished value claims, so you must present a strong case.

Consider taking these steps to prepare for filing a claim:

• Hire an appraiser licensed according to the Uniform Standards of Professional Appraisal Practice.
• Get repair documentation from your car dealer.
• Have your vehicle appraised.
• Calculate the diminished value of your vehicle.
• Generate a diminished value report with market data and facts.
• Write a demand letter.

You can email or mail the demand letter and all the documentation to the at-fault driver’s insurance company.

How Long Do You Have to File a Diminished Value Claim?

The amount of time you have to file a claim varies from state to state. It can be two years or more. However, it might be a good idea to file as soon as possible after your vehicle is repaired.

How Do You Negotiate a Diminished Value Claim?

Once you file your claim with an insurance company, expect that the insurer’s first response may be below the value you want and be ready to counter. Appraisers believe you should expect a value between 10% and 15% of book value for minor damage and between 15% and 25% for moderate to major damage.

If your question then is, “What is the average diminished value claim?” insurance companies typically aim for 10% of book value.

An appraiser also can assist you in negotiating. If negotiations fail, you also can hire an attorney and take the at-fault driver to court to seek compensation for your loss of value claim.

How to Determine Diminished Value

After car and truck accidents, diminished value can be calculated in many ways. However, the insurance industry has settled on a standard known as the 17c formula. That formula came from a 2001 Supreme Court of Georgia case, State Farm Automobile Insurance Company v. Mabry.

The 17c formula takes 10% of the book value of a vehicle and multiplies it by mileage and damage modifiers based on a scale to arrive at a diminished value.

For example, if you have a $23,000 vehicle with 70,000 miles and moderate damage, you would have ($23,000 x 10%) x (.30 mileage modifier) x (.50 damage modifier) = $345.

Some diminished value appraisers argue the 17c formula lowballs the diminished value to write you a smaller check. Among appraisers’ claims is that the formula unfairly counts mileage twice because it’s already baked into the book value.

When Is the Best Time to File a Diminished Value Claim?

Typically, it’s best to file car accident claims shortly after the accident. This is the case for diminished value claims as well. The sooner you file, the easier it can be to gather and present all necessary evidence.

Another reason to file early is that cars depreciate quickly. Insurance companies may be skeptical or even suspect fraud if you have your vehicle appraised months after the accident and then file a claim based on that appraisal.

It’s important to note that each state has its own statute of limitations for diminished value claims. If you don’t intend to file right away, you should first make sure you know your state’s deadline.

Find More Answers About Diminished Value Claims

You have the right to seek loss of value in your vehicle after an accident that isn’t your fault. At ConsumerShield, we are dedicated to providing answers to empower you. If you have questions about diminished value claims, reach out to us today.