But there’s another cost that results from car accidents: your car’s value will depreciate. So even after your vehicle is repaired—or even if you don’t need any repairs done—your vehicle will still be worth less than one with no accident history.

Under the right circumstances, a

diminished value claim

can compensate you for the value your vehicle loses after an accident. But state laws vary regarding claims for diminished value. Alabama is one such state that allows drivers to submit diminished value claims after an accident.

MORE: Diminished value calculator: how to calculate your claim

The three types of diminished value

Technically, there are three main types of diminished value:

Immediate diminished value: Refers to the value of a vehicle after an accident and before any repairs are made

Repair-related diminished value: Refers to lost vehicle value due to faulty repairs

Inherent diminished value: Refers to the lingering diminished value after all necessary repairs are made

When people discuss diminished value claims in Alabama, they’re typically referring to inherent diminished value, so that’s what we’ll explore from here on out.

MORE: How to estimate trade-in value for your car

What is the difference between diminished value and depreciation?

No matter what, all

cars depreciate

over time. But diminished value after an accident will result in a much steeper drop in your car’s value.

If you’re shopping for a 2015 Ford F-150 and you find two options that both have 75,000 miles—same

trim level

, too—but one has been in an accident, you can count on the latter having a notably lower value.

Why? Because even after repairs, an accident can leave a vehicle less reliable than it was before, and as complex as vehicle systems can be, there’s always the chance that a problem that was created from the accident may have gone undetected.

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Diminishing deductibles

What is the difference between a diminished value claim and a diminished value appraisal?

A diminished value claim refers to the general process of requesting compensation from your insurance provider for the lowered value of your vehicle.

After filing the claim, a diminished value appraisal will typically be your next step. The appraisal process will seek to verify exactly how much value your vehicle might have lost after an accident.

Using tools like Kelley Blue Book’s market value estimates can help give you a sense of what your vehicle’s diminished value may be, but you’ll want a professional’s appraisal to get the most accurate dollar amount for your own vehicle—and your provider will likely require it before writing you a check.

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How to get a rebuilt title in Alabama

How to file an Alabama diminished value claim

The process of filing a diminished value claim in Alabama is generally pretty similar to the steps you’d take to

file a typical car insurance claim

—but you may need to do some homework before making that request.

First, you’ll want to confirm whether your own car insurance policy would cover diminished value after an accident, because this coverage isn’t automatic. Most insurance companies exclude diminished value claims from collision coverage since at fault drivers are not allowed to make a claim on this coverage.

More commonly, drivers will file a third-party diminished value claim with an at-fault driver’s insurance company to receive compensation if the liability coverage payout doesn't account for decreased value.

You’re more likely to have a successful diminished value claim in Alabama if you can satisfy the following criteria:

You were not at fault for the accident

Your vehicle has had no previous accidents

You can assign a verifiable dollar amount to your vehicle’s diminished value

You own your car, as opposed to leasing or financing it

Once you make your case, the insurance company will decide whether or not to offer you compensation.

In summary, these are the general steps involved with filing a diminished value claim in Alabama:

You can demonstrate your vehicle lost value. Seeking out a professional appraisal from a used car dealership or another source of expertise can help you determine a reliable, specific dollar amount.

Submit your claim. Depending on your car insurance policy, you may be able to seek first-party compensation from your own provider through

collision coverage

, but it is unlikely. You will have better luck filing a claim with the at-fault driver’s insurance. Check to see whether the provider has specific procedures regarding diminished value claims.

Wait. Diminished value claims don’t always get approved, so after you submit your claim, it’s a matter of waiting for the adjuster’s decision.

Even if you follow all the recommended steps, your diminished value claim may be unsuccessful. If you believe this is in error, you can seek legal counsel for a potential lawsuit, but you’ll have to decide whether it’s worth the effort. The average payout for a diminished value claim is between $500-$2,000.

MORE:

How much does your insurance go up after an accident?

The 17c formula: free diminished value calculator

Getting a professional appraisal is your best bet to filing a successful diminished value claim, but it helps to know

how diminished value is calculated

to give you a better idea of what to expect.

While it’s not exact, experts commonly use what’s referred to as the 17c formula when determining the diminished value of a vehicle after an accident. Using the formula can give you a rough initial estimate to help you decide whether it’s worth pursuing a diminished value claim.

First, use a resource like Kelley Blue Book to find your pre-accident vehicle value based on its make, model year, mileage, features, and condition. Multiply this value by .1—in other words, 10%—for your base loss value.

After determining your base loss value, there are additional multipliers to account for mileage and the severity of the vehicle damage.

To account for damage, use any applicable multipliers:

1 if the car has structural damage

0.75 if the car has major panel or structural damage

0.5 if the car has moderate panel or structural damage

0.25 if the car has minor panel or structural damage

0 if the car has no structural damage

For your mileage multiplier, use the following number that corresponds with your own vehicle’s mileage:

1 if your mileage is between 0 and 19,999

0.80 if your mileage is between 20,000 and 39,999

0.60 if your mileage is between 40,000 and 59,999

0.40 if your mileage is between 60,000 and 79,999

0.20 if your mileage is between 80,000 and 99,999

0 if your mileage is above 100,000

Let’s say you were in a fender bender while driving your 2012 Acura RDX. Based on its 95,000 miles and other factors, you discover its pre-accident value appears to be about $11,000.

After your accident, that gives you a base loss value of $1,100. The damage was determined to be minor, so multiply your base loss value by 0.25 to get 275. Multiply that value by 0.2 for your mileage, and you’ll get your estimated diminished value: $55.

For $55, filing a diminished value claim might not seem worth your while, but your loss in value could be much steeper if you’re driving a new or high-value vehicle. For a 2021 Chevrolet Blazer with 24,000 miles and a value of about $22,000, you’d have a base loss value of $2,200. If the vehicle withstood more moderate damage, you could see a diminished value of $880.

What is the statute of limitations for a diminished value claim in Alabama?

In the state of Alabama, drivers generally have two years to file a diminished value claim with an insurance company after an accident. If you attempt to file a claim beyond the applicable statute of limitations, it will most likely be rejected.

MORE:

How long do you have to file a claim?

The bottom line

Alabama allows for diminished value claims to be filed, but that’s not always a guarantee you’ll get compensation for lost value after an accident. When drivers decide it’s worth it to pursue a claim, having a professional appraisal to determine a specific dollar amount for lost value will increase the odds for success.

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