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Diminished Value Claims, Explained
Diminished value claims pay the difference between the market value of your car before and after an accident, but only if you’re eligible.
Written by Jasmine Kanter
Edited by Amy Bobinger
If you’re in a car accident, your vehicle may not be worth as much as it was before the collision, even after repairs are completed. This is known as diminished value, and you may be able to file a
car insurance
claim for the difference. If you weren’t at fault, car insurance providers will pay up to 10% of the pre-accident market value of a severely damaged, low-mileage car.1Diminished value is the difference between pre and post-accident value
Most diminished value claims address inherent diminished value, which is the difference in the market value of your car before an accident and after it’s repaired following the accident. According to Carfax, potential buyers pay an average of $500–$1,700 less for a repaired vehicle with an accident history.2 A diminished value claim is designed to reimburse the vehicle owner for this loss.
Immediate vs. repair-related diminished claimsAlong with inherent diminished value claims, there are also immediate and repair-related claims. Immediate claims address the difference in actual cash value directly after a crash, but before the vehicle is repaired. Repair-related claims are determined based on the decreased overall value after low-quality repairs.
Immediate vs. repair-related diminished claims
Along with inherent diminished value claims, there are also immediate and repair-related claims. Immediate claims address the difference in actual cash value directly after a crash, but before the vehicle is repaired. Repair-related claims are determined based on the decreased overall value after low-quality repairs.
Age, mileage, and damage further reduce the value of a potential payout, meaning the average car owner may not get much value from a diminished value claim.
To show you an example of how insurers might calculate the maximum payout for a diminished value claim, we looked at the average age of vehicles on the road today (13 years), plus the most popular vehicle in the US (Ford F-Series).56 The result: minor and structural damage payouts for a 2011 Ford F-150 XL with an original MSRP of $22,360, assuming it received adequate quality repairs:
Miles | No damage | Minor damage | Moderate damage | Major damage | Severe damage |
|---|---|---|---|---|---|
<20k | $0 | $559 | $1,118 | $1,677 | $2,236 |
20k - 40k | $0 | $447 | $894 | $1,341 | $1,788 |
40k-60k | $0 | $335 | $670 | $1,006 | $1,341 |
60k- 80k | $0 | $223 | $447 | $670 | $894 |
80k- 100k | $0 | $111 | $223 | $335 | $447 |
100k< | $0 | $0 | $0 | $0 | $0 |
File a diminished value claim for a high-value, low-mileage car
Inherent diminished value claims give the highest payouts to cars with above-average price tags and below-average mileage. Here’s when to consider claiming the diminished value of your vehicle:
You weren’t at fault: Diminished value claims rest on the argument that car insurance policies cover every element of loss related to a car accident, but state law decides who pays for these losses in the first place. The negligence laws in most states make the car insurance company of the
at-fault driver
responsible for paying damages.You were hit by an uninsured driver: If you weren’t at fault in a car accident with an uninsured driver, you may be able to claim the diminished value of your car under
uninsured motorist property damage coverage (UMPD)
. Whether or not you have this coverage (and if it permits diminution of value claims) depends on your insurance company and state law, so call an insurance agent.You were hit by an unknown driver: Uninsured motorist coverage can also apply to a hit-and-run. Call your own insurance company to check whether you can file a claim.
Your car has a high MSRP: Rare, luxury, and performance car owners stand the most to benefit from a diminished value insurance claim.
Your car is low-mileage: Diminished value claims award higher payouts to owners whose cars don’t have many miles on the odometer.
Your car was badly repaired: You may be eligible to file a repair-related diminished value claim if your car was poorly repaired, whether it’s the fault of non-OEM parts or shoddy workmanship. In this case, the diminution of value is related to the quality of the repairs, not necessarily the accident.
File diminished value claims as soon as possible
The time you have to file a diminished value claim ranges from 30 days in
North Carolina
to a decade in Rhode Island
.7 Regardless of state law, it’s best to file a claim with the at-fault driver’s insurance company as soon as possible. You can avoid further loss of value due to depreciation and make use of the evidence you collected after the car accident
.Call your auto insurance provider to inquire about
filing a car insurance claim
and ask what you need to submit. After the claims adjuster considers your case, they’ll inform you if your claim was approved and how much the insurance company is willing to offer you.Diminished value claim limitation periods by state
Limitation period | States |
|---|---|
One year | |
Two years | Alabama , Alaska, Arizona , Colorado , Connecticut , Delaware , Hawaii, Kansas , Kentucky , Indiana , Montana , Ohio , Oklahoma , Pennsylvania , Texas , and West Virginia |
Three years | Arkansas , California , District of Columbia, Idaho , Maryland , Massachusetts , Michigan , Mississippi , New Hampshire , New York , Nevada , North Carolina , South Carolina , Tennessee , Utah , Vermont , and Washington |
Four years | |
Five years | |
Six years | |
10 years |
Make a counteroffer after research
If you don’t approve of the settlement offer extended by your auto insurance company, you can make a counteroffer, but only after doing some research.
As with a
totaled car insurance payout
, you should thoroughly research your car’s market values and document any high-value accessories or repair work before arguing for an increase. It might be worth it to hire a certified vehicle appraiser just to get a professional opinion and certificate.When you shouldn’t file a diminished value claim
These six factors can prevent you from filing a diminished value claim or getting a worthwhile payout:
- You don’t own the car: It’s unlikely your diminished value claim will be approved if you don’t own the vehicle, but every case and state is different.
- Your car has over 100,000 miles on it: Insurers multiply the value of a vehicle with 100,000 miles and up by zero during their calculations, which reduces the potential payout to nothing.9
- Your car is low-value: Given that diminished value calculations rest on the vehicle’s original MSRP, you’re unlikely to get much compensation for a car that wasn’t very expensive when it was new.
- Your car is salvage or rebuilt: The Kelley Blue Book rule of thumb is to deduct 20-40% of a car’s value if it has a salvage or rebuilt title, which drastically limits the amount you can claim.10
- You’re the at-fault party: Most state negligence laws prevent at-fault drivers from claiming all or part of the damages they caused, including diminution of value.
What’s the formula for a diminished value claim?
To estimate diminished value claim payout yourself, use the industry-standard 17C Diminished Value Formula.
First, take the vehicle’s pre-accident market value from the NADA, Kelley Blue Book, Autotrader, or other common evaluation site, then divide the market value of the vehicle by 10.
Once you have that number, multiply the result by a structural damage multiplier: 0 for zero damage, 0.25 for minor damage, 0.50 for moderate damage, 0.75 for major damage, and 1.00 for severe damage.
From there, multiply the result by a mileage multiplier: 0 for 100,000 miles or more, 0.20 for 80,000 - 99,999 miles, 0.40 for 60,000 - 79,999 miles, 0.60 for 40,000 - 59,999 miles, 0.80 for 20,000 - 39,999 miles, and 1.00 for 19,999 miles or less.
For example, the KBB values a
2017 Toyota RAV4 SE AWD
in good condition with 88,536 miles at $16,50011. After suffering major structural damage, the most you could claim for diminished value would be about $250.Claims are already stressful—so why make car insurance a hassle, too?
Claims are already stressful—so why make car insurance a hassle, too?
Compare quotes to find cheaper rates after a claim with Jerry
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FAQ
Are insurance companies required to pay diminished value?
Whether or not an auto insurance company is obliged to pay a diminished value claim depends on state law.
How long do I have to file a diminished value claim?
The statute of limitations on diminished value claims ranges from 30 days in
North Carolina
to four years in Florida
.How long does it take to settle a diminished value claim?
The time it takes to settle a diminution of value claim depends on your insurance provider’s claims process, but it’ll ideally take 30 days.
What’s immediate diminished value?
“Immediate diminished value” refers to the difference between the market value of your vehicle before a car accident, and the diminished value of your vehicle immediately after the accident (and before any repairs). The main use of immediate diminished value is in court.
Meet our experts
Jasmine Kanter
Jasmine Kanter is a non-fiction writer specializing in comprehensive content that's accessible to beginners, experts, and everyone in between. Since joining the Jerry team, Jasmine has penned over 300 articles on car insurance requirements, driving tips, and car maintenance.
Prior to joining Jerry, Jasmine worked as a graphic designer, storyboard artist, and French customer service representative. She enjoys collecting hobbies and babysitting ducks in her spare time.
Amy Bobinger
Licensed Insurance Agent — Expert Insurance Editor
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.
Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.
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