You’ll never forget the day a new car becomes yours—or the moment that you find its first scratch. Eventually, you get used to things not being perfect. But what happens if your vehicle incurs major damage? You can always restore the car to its former glory…or can you? Suddenly your perfect, new car isn’t perfect anymore, and you aren’t the only one who knows it. 

There’s a reason that cars with an accident on their record fetch less than those that don’t. It has to do with the way we feel about less than perfect things…it has to do with diminished value

You may not be able to save your perfect car from scratches, but you can save up to 70 percent on car insurance by comparing car insurance quotes with Insurify.

Score savings on car insurance with Insurify

Compare Quotes

What Does “Diminished Value” Mean? 

“To diminish” means “to make less.” In this case, it applies to the market value of your car. Typically, when a vehicle is in an accident, the car’s value is less than it was before the car accident. Even if the vehicle is restored to pristine condition, it can never truly be the same as it was before. Think about it. Given a chance to buy two identical(-looking) cars, would you buy the one that had been in an accident? Not likely, right? The lost value is often simply due to perception. 

There are three types of diminished value:

  1. Inherent Diminished Value is the most common form of diminished value claim. “Inherent” means that something is built-in or comes with. If your car has been in an accidenteven if it’s restored as correctly as possibleit is seen as inherently damaged. You file an inherent diminished value claim after the car has been repaired.
  2. Immediate Diminished Value claims aren’t often filed, but they exist. Immediate diminished value claims seek to recoup the difference in resale value immediately after an accident but before the vehicle is repaired. 
  3. Repair-Related Diminished Value has to do with how a vehicle is repaired after the accident. If you use after-market parts or if the repair shop did a less than stellar job, then you may want to file a repair-related diminished value claim. For example, a truck owner has a structurally damaged door replaced. Even though it is a factory part and looks perfect, it rattles. That rattle is cause to file a repair-related diminished value claim.

How to File a Diminished Value Claim

When filing a diminished value claim, you need to decide first whether to hire a diminished value expert to handle the claim for you or if it’s more reasonable to file the claim yourself. 

It typically costs between $300 and $500 to hire an expert, so minor damage probably isn’t worth filing a diminished value claim. Diminished value experts also suggest that the damage be at least $2,500 and that the car is a newer make/model. 

For do-it-yourselfers, filing a diminished value claim may take a little more effort, but it isn’t impossible. Although the response that you receive from the insurance company may be questionable (the insurance company may reject your offer outright or respond with a lowball counteroffer), filing a diminished value claim is relatively straightforward:

1. Create a demand letter.

A demand letter is simply a letter that you send to the insurance company outlining your claim. If you hire a diminished value expert, they will generate the demand letter (and supporting details) for you. If you write the demand letter yourself, be sure to include the following details and supporting documentation:

  • Your name and address
  • Insurance company name and address
  • Name of the adjustor
  • Claim number
  • Date of loss
  • At-fault driver’s name
  • The dollar amount of repairs
  • The diminished value claim amount (work with the body shop and appraiser for this number) 
  • The date that you expect a response and payment (usually between 21 and 30 days from receipt)
  • Any other losses related to the diminished value claims process
  • Documentation showing your vehicle’s pre-accident value (consult the Kelley Blue Book website for this number)
  • Updated vehicle history report (like Carfax) showing the value of your vehicle after repair (this will include your vehicle’s accident history)
  • Copy of police accident report (if available)

2. Send the demand letter.

When you send the demand letter to the insurance agency, make sure that you’ve sent it by email, fax, and certified mail if possible. The goal is to be sure that the insurance company indeed gets the documentation (and to keep everyone honest). 

Insurance companies have a legal obligation to respond to your claim in a timely manner, so be sure that you include the amount of time in which you expect a response (usually between 21 and 30 days). Diminished value claims can be first-party claims (you send the claim to your own insurance company) and third-party claims (meaning that you send the claim to the other motorist’s insurance company). Whether or not an insurance company will consider first-party vs. third-party claims varies by state.

3. Prepare to negotiate.

Don’t be surprised if the first response that you get is a flat-out rejection of your claim for the diminished value of your car. Insurance companies are not in the business of losing money, so they’re likely to deny or fight your claim. You may even have to take them to county or small claims court (another reason why some people hire diminished value experts instead of doing it themselves). Once in court, it is your responsibility to prove liability and damages. Though some people have reported having to go several rounds with an insurance company before being awarded all or part of their claim, the hassle may be worth it if it means winning your case and getting your cash.

Note: You are more likely to be awarded this type of claim if you are not the at-fault party, although, in some rare instances, at-fault parties have been granted a diminished value claim.

Diminished Value Claim Laws by State

Diminished value claim laws vary widely from state to state. Wyoming requires that you submit your claim within four years. In Pennsylvania, however, you only have two years to file a claim. And Georgia is one of the few states that recognizes first-party claims (when car owners send their claim to their own insurance companies). Additionally, states differ on whether or not they will recognize uninsured vehicles in diminished value claims

Which States Will Pay Diminished Value Claims

Most states have laws concerning diminished value, while some states, like Maine, do not. This doesn’t mean that you can’t get paid for a diminished value claim and may be a case in which hiring a diminished value expert can do you some good.

To be confident whether your state does or does not pay diminished value claims, you can also contact your State Insurance Commissioner.

How to Calculate Diminished Value

Although a Georgia law deemed it unfair because it favored dealerships, the 17c methodology is the most widely accepted way to calculate diminished value. This page includes several diminished value calculators using the 17c method. An alternative to the 17c method is to contact an appraiser, who can use other methods for arriving at and supporting a diminished value calculation.

Diminished Value Claim FAQ

How do I file a diminished value claim?

To file a diminished value claim, you must submit a demand letter (detailing the diminished value that you are claiming—with supporting details) to the insurance company. You can hire a diminished value expert to do the legwork for you (including small claims court appearances, if necessary), or you can consult with the repair shop and appraiser for demand letter details pertaining to your vehicle. Some states allow you to submit a diminished value claim with your own insurance company (first-party), while others will only consider claims sent to the at-fault, third-party provider.

What is a diminished value claim?

If you’ve been in an accident, you can submit a claim for the difference between the value of your car immediately before the accident and after it is repaired. This is called a diminished value claim. There are three types of diminished value claims: inherent, immediate, and repair-related (inherent being the most common). The insurance company is more likely to consider your diminished value claim if the accident wasn’t your fault.

How can I file a diminished value claim with State Farm?

Don’t bother searching the term “diminished value” on State Farm’s website or any other insurer’s site for that matter. You won’t find the term on an auto insurance policy, either. Simply go about the State Farm auto claims process the way that you would any other State Farm vehicle insurance claim. You may want to send the claim details (including the demand letter) by several different methods to be sure that the insurance company has received your claim. Be prepared to negotiate and arm yourself with more information by viewing or reading about other people’s experiences on YouTube and Reddit.

Where can I compare car insurance quotes online?

You can compare car insurance quotes online quickly and securely on The process only takes a few minutes. Secure a ready-to-buy car insurance policy online—no spam, no scams.

Conclusion: Getting insurance to pay for your diminished value claim

If leaving money on the table isn’t your style, a diminished value claim could be what you are looking for. 

Are you fed up with your current provider—and price point? If you’re looking to save up to 70 percent on car insurance, Insurify can hook you up quickly and securely with real quotes from a list of dozens of carriers both locally and beyond.

Insurify’s your one-stop portal to find the cheap car insurance that works for you. “Diminish” your rates today by seeing how much you can save.

Updated July 24, 2020

Jeannette Wisniewski is a technology writer whose passion is encouraging people to engage with technology by making it more understandable and more interesting. Though she enjoys writing business copy for a wide range of subjects, she is most inspired by emerging tech and its applications. She is a graduate of San Jose State University, a Georgia Peach at heart, and happy to call Boise, ID home.