5+ years writing insurance and personal finance topics
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Elizabeth has extensive insurance industry experience, having written for Insureon, Rate Retriever, and Insurify. She’s also finance and insurance editor for Car and Driver.
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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Your car’s value decreases after an accident, even if you have the damages repaired.
Diminished value is the value your car loses after an accident and related repairs. If another driver caused the accident, a diminished value claim could help you recover that loss in value from the other driver’s insurance company.
Vehicles lose value over time from normal wear and tear and mileage. Most new cars lose up to 60% of their value within the first five years of ownership, according to Kelley Blue Book.[1]
Here’s what to know about diminished value insurance claims, including the different types and how it’s calculated.
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What is a diminished value claim?
When your car sustains damage in an accident, it automatically loses some of its worth, even if it’s later repaired and looks brand-new. This loss of worth is diminished value — the difference between a car’s market value before and after an accident, post-repairs.
If you sell or trade in the vehicle, you won’t get as much money from potential buyers due to its lower value. In this situation, you may choose to file a diminished value claim to collect the monetary difference between your car’s pre- and post-accident value. The value depends on the car’s worth before and after a collision.[2]
When you can file a diminished value claim
A diminished value claim can help you avoid a major financial hit when reselling or trading in a damaged vehicle. But it’s not an option for every driver.
It might make sense to file a diminished value claim in the following scenarios:
You’re not at fault. These claims are typically only viable if another driver caused the accident.
Your car has a high value. You might have a better chance of getting a claim approved if you have a newer vehicle with low mileage.
An uninsured driver caused the accident. Your chances of receiving a payout can be higher if an uninsured driver caused the property damage.
State law allows it. Every state except Michigan allows these claims and has unique laws for diminished value claims.
Types of diminished value claims
Drivers can file different types of diminished value claims. Here’s an overview of a few main types of claims and what situations they apply to.
Inherent diminished value claim: You ask an insurer to compensate you for the difference between the car’s post-accident value and what you could have sold it for before the accident. This is the most common type of claim.
Immediate diminished value claim: This claim type applies when you want to collect money for your car’s loss in resale value right after an accident occurs and before repairs. You can take the insurance settlement and repair your vehicle anyway, so it’s essentially an extra step to have insurance pay for your repairs.
Repair-related diminished value claim: If you have concerns about the quality of your car’s repairs following an accident, you can file a repair-related claim to recoup the loss of value. For example, the repair shop could reduce your vehicle’s value by using low-quality materials to repair frame damage instead of original equipment manufacturer parts.
How to calculate diminished value with formula 17c
Car owners can use formula 17c to calculate their vehicles’ diminished values. If you need to calculate your car’s diminished value, grab a calculator and complete the following steps:[3]
1. Determine your car’s value
Some online resources have free fair value estimators, like KBB, CARFAX, and the National Automobile Dealers Association (NADA).
To find the market value, you’ll need to plug in basic information about your car, like the make, model, mileage, year, condition, trim package, and VIN.
2. Apply a 10% cap
Next, take 10% of the fair market value of your vehicle from step 1 to get the base loss of value. This represents the maximum payout an insurance company will provide when you file a claim.
In the diminished value formula, you can take the estimated value of your vehicle and multiply it by 10%. For example, if NADA shows that your car’s estimated value is $15,000, the base loss of value is $1,500.
Here’s the simplified formula: Estimated value × 0.10 = Base loss of value
3. Apply the damage multiplier
Next, you’ll need to find the damage multiplier. Auto insurance companies use the damage multiplier to better determine the diminished value of your vehicle based on the specific type of damage from the accident. Every car insurance company uses the same system of damage multipliers.
Damage multipliers range from 0.00 to 1.00, with 0.00 representing no structural damage and 1.00 representing the most significant damage. Once you find the damage multiplier for your car, you need to multiply that figure by the 10% cap value.
For example, let’s say your car’s base loss of value is $1,500, and it has major structural damage. In this case, the damage multiplier is 0.75. To complete the next step of the formula, multiply $1,500 by 0.75 to find the adjusted loss of value, which is $1,125.
Simplified Formula
Base loss of value × damage multiplier = Adjusted loss of value of the vehicle
Below, you can view the multipliers for various levels of damage.
Damage
▲▼
Multiplier
▲▼
Severe structural damage
1.00
Major structural and panel damage
0.75
Moderate structural and panel damage
0.50
Minor structural and panel damage
0.25
No structural damage
0.00
4. Apply the mileage multiplier
The last step is to apply the mileage multiplier. Insurance companies use this figure to determine how your car’s mileage will affect its resale value. You can find the mileage multiplier for your car in the table below:
Using formula 17c, let’s complete the calculation for the diminished value of a vehicle using the following vehicle information:
Original car value of $15,000
Damage multiplier of 0.75 from sustaining major damage in an accident
42,000 miles and a mileage multiplier of 0.60
The base loss of value for the car is $1,500 ($15,000 × 0.10 = $1,500). That’s the maximum payout you could receive from an insurance company.
The value adjusted for the car’s major damages is $1,125 ($1,500 × 0.75 = $1,125).
Finally, the car’s adjusted value for its mileage is $675 ($1,125 × 0.60 = $675).
That means the car’s diminished value is $675, and this is the amount you could receive from an insurance company.
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How to file a diminished value claim
Filing a diminished value claim is more complicated than a standard collision claim because you need to prove your car’s diminished value.
Follow these steps to file your claim:
Contact the insurer of the at-fault driver. Ask a company representative about the claim filing process, what documentation to provide, and what rights you have when filing.
Gather your documents. You’ll need to present evidence to support your case, including photos of the vehicle damage or accident scene and the police report.
Calculate your car’s diminished value. Use a site like NADA or KBB to find the car’s pre-accident fair market value. Then, use formula 17c to calculate the lost value.
Have your car appraised. Even if the insurance company doesn’t require a vehicle appraisal as part of the claim, having a vehicle appraisal from a dealership or certified appraiser can help support your claim.
Submit the claim. Follow the insurer’s instructions and include the required paperwork to avoid delays. Then, wait for a response from the insurer.
The following information can help answer your remaining questions about diminished value claims following an auto accident.
How do you calculate the diminished value of a car?
Use formula 17c to calculate the diminished value of the vehicle. To start, find your car’s estimated market value. Then, find the base loss of value, which is the car’s market value multiplied by 10%. Next, calculate the value adjusted for the car’s damage, using the correct damage multiplier. The final step is to find the car’s adjusted value for its mileage by multiplying the car’s adjusted damage value by the correct mileage multiplier.
Is diminished value negotiable?
It might be possible to negotiate your car’s diminished value if you’re an accident victim. But it depends on the specific situation and your insurance company. If you want to negotiate for a higher payout, you need to back up your argument with proof of your car’s diminished value.
What does diminished value mean in insurance?
The diminished value of your car is the difference between the fair market value before a crash and the value after an accident upon completion of necessary repairs. Filing a loss of value claim allows you to recoup the money you would lose when selling your vehicle after the accident, even when car repairs are complete.
How do you file a diminished value claim after a car accident?
To file a diminished value claim, you must contact the insurance company of the driver who caused the car accident. An agent will walk you through the process of filing a claim for the lost value of your car and what information you need to provide. You’ll need to calculate the diminished value of your vehicle and potentially need a certified appraiser to have your car appraised.
How long does a diminished value claim take?
Diminished value claims can take a few weeks or a few months to process. The amount of time depends on a number of factors, including the type of diminished value claim and the insurance company. If you haven’t received an update from the at-fault party’s insurance company after several weeks, it’s a good idea to check in.
Methodology
Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.
Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).
Liability-only premium averages correspond to policies with the following coverage limits:
Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
Property damage limits between $10,000 and $50,000
No additional coverage
Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to:
Comprehensive coverage with a $1,000 deductible
Collision coverage with a $1,000 deductible
Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.
Elizabeth Rivelli is a freelance writer covering insurance and personal finance. She has extensive knowledge of various insurance lines, including property and casualty, health, and life insurance. Her byline has been featured in dozens of publications, including Investopedia, Forbes, Bankrate, NextAdvisor, and Insurance.com.
Elizabeth has been a contributor at Insurify since October 2022.
Edited byKatie PowersAuto and Life Insurance Editor
Katie PowersAuto and Life Insurance Editor
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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