What Is a Diminished Value Claim?

How to File a Diminished Value Claim & More

The value of your car starts to decrease as soon as you drive it off the lot. This means that if you were to sell it right away, you would lose money. However, if your car is involved in an accident, its value will decrease even more.

This is why there is a process in place to help drivers recover some of the money they lose in accidents that they didn’t cause. Keep reading for a detailed guide on diminished value claims, how to file one, and whether or not it’s worth the effort.

Let’s get started.

What is Diminished Value?

Diminished value is the difference in your car’s value before and after an accident. This is true even if your car is repaired to its pre-accident condition.

If you plan to keep your car forever, diminished value may not matter much to you. But if you plan to sell or trade in your car, diminished value could cost you a lot of money.

There are three types of diminished value:

  • Immediate diminished value: This is the difference in value right after an accident and before the vehicle is repaired.
  • Inherent diminished value: This is the difference in value after an accident and after the vehicle is repaired.
  • Repair-related diminished value: This is the difference in value after an accident and after low-quality repairs are performed.

Seeing your car lose value over an accident, especially if you didn’t cause it, can be frustrating as a car owner. This is where a diminished value claim comes in.

What Is a Diminished Value Claim?

A diminished value claim is an insurance claim that you file after an accident occurs and usually before repairs are completed. It is designed to compensate owners for the loss in value after an accident.

However, not all diminished value claims are successful. In order to have a successful claim, you must be able to prove that the value of your vehicle has decreased as a result of the accident. This can be done by obtaining an appraisal from a qualified appraiser.

In most cases, you will file the diminished value claim with the other driver’s insurance company. However, if you are at fault for the accident, you may need to file the claim with your own insurance company.

The amount of the diminished value claim will vary depending on the specific circumstances of the accident. However, you can expect to receive a few thousand dollars in compensation.

It is important to file the diminished value claim as soon as possible after the accident. This will improve your chances of having the claim approved.

How to File a Diminished Value Claim

Filing a diminished value claim can be more complicated than filing a regular car insurance claim. This is because you are responsible for proving the diminished value of your vehicle, and insurers are not always eager to pay out these claims.

However, we will walk you through the process. First, you will almost always file the claim with the other driver’s insurance company. This is because the other driver is at fault, so their insurance should pay for the diminished value of your vehicle. However, if you are at fault, your claim will likely be denied.

In some cases, you may need to file the claim with your own insurance company, such as if you were in an accident with an uninsured driver or if you were the victim of a hit-and-run.

Here are the steps to filing a diminished value claim after an accident:

  1. Contact the insurance company to find out their process for filing a diminished value claim.
  2. Calculate your vehicle’s market value before and after the accident.
  3. Gather evidence of your vehicle’s diminished value, such as photographs, repair estimates, and appraisals.
  4. Submit your claim to the insurance company.

Once the claim is filed, the insurance company will review it and let you know if it has been approved or denied. They may also ask you for additional documentation.

How to Calculate Diminished Value

You may want to get an estimate of how much your diminished value claim payout might be, so we’ll show you how to calculate that value yourself.

The most common way to determine diminished value is the 17c Diminished Value Formula:

  1. Determine the current market value of your vehicle using online tools like Kelley Blue Book.
  2. Apply a 10% cap to that value, also known as the base loss of value. This is the maximum amount the insurance provider will pay on the claim.
  3. Use a damage multiplier to adjust the value after the 10% cap. This multiplier is based on how damaged your vehicle is:
    • 1.00 for severe structural damage
    • 0.75 for major damage to structure and panels
    • 0.50 for moderate damage to the same
    • 0.25 for minor damage to the same
    • 0.00 for no structural damage
  4. Use a mileage multiplier to adjust the value even further:
    • 1.00 for 0-19,999 miles
    • 0.80 for 20,000-29,999 miles
    • 0.60 for 40,000-59,999 miles
    • 0.40 for 60,000-79,999 miles
    • 0.20 for 80,000-99,999 miles
    • 0.00 for over 100,000 miles

For example, if your vehicle was worth $20,000, had major damage, and 45,000 miles on it, your maximum diminished value payout would be $900. This amount is designed to help you recover the lost value of your vehicle.

Is filing a diminished value claim worth it?

It usually is, as long as your claim is solid. Your vehicle has lost value due to no fault of your own, so you should be compensated for that.

Filing a diminished value claim with the at-fault driver’s insurance provider will not affect your own insurance rates.

However, not all claims are approved, as it can be difficult to prove diminished value. You may also need to be prepared to wait, as these types of claims can take longer than other auto insurance claims to resolve.

Final thoughts:

A car accident can be upsetting, and seeing your vehicle lose value due to an accident you didn’t cause can add to the frustration. Even though your insurance may repair the vehicle as much as possible, it loses value simply by virtue of having been in an accident.

A diminished value claim can help you recover some of that lost value. The process isn’t always easy, but if you succeed, it can help put you back in the same financial position you were in before the accident.

So can great car insurance. If your insurance isn’t meeting your needs, switching is easier than you might think. Start with access to free quotes here, so you can figure out if it’s time to uplevel your car insurance.

What Is a Diminished Value Claim?

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top