A diminished value claim allows you to go through the car insurance
company of the at-fault driver in a car accident for compensation toward the now-reduced value of your vehicle. So whether you were in a simple fender bender or a major collision, filing a diminished value claim in North Carolina can recover that drop in value. Getting into a car accident is stressful and painful enough without also bearing the burden of a significantly reduced vehicle value. Thankfully, North Carolina drivers involved in a car accident in which they were not at fault can file a diminished value claim to recover the loss in value. Here’s what you need to know.
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What is a diminished value claim?
When you’re involved in a car accident, the overall value of your vehicle drops and sometimes significantly—even after a full repair is made. A diminished value claim is a way to reclaim the value lost due to an accident. In North Carolina, you can only make a diminished value claim if you are found not at fault in the accident.
The diminished value of a vehicle is the difference in market value between the car’s initial market cost and the car’s worth after an accident. Depending on the accident's severity, that difference could be enormous, leaving you out potentially thousands of dollars if you ever try to resell your vehicle.
Since accident records never leave the vehicle’s history and nearly always reduce the vehicle’s value, filing a diminished value claim may be the only way to recover those lost costs.
What is the difference between diminished value and depreciation?
Diminished value and depreciation are not the same, so we will break them down here.
Diminished value is the amount of money no longer associated with your vehicle after an accident caused any damage to it. For example, let’s say your vehicle was valued at $25,000 last week but you got into an accident yesterday with enough damage to bring your car’s value down to $20,000. That $5,000 difference is the diminished value.
Depreciation happens to every car, regardless of its accident history. Vehicles naturally decrease in value due to use and age.
What is the difference between a diminished value claim and a diminished value appraisal?
A diminished value appraisal is how you get the diminished value claim ball rolling. Before you can make a claim with the other driver’s insurance company, you need to have your vehicle appraised and revalued to prove there was in fact a drop in vehicle value.
Typically, it’s best to have a professional appraiser perform this step, and you will likely need a signed statement from one when filing your diminished value claim. However, you can get an idea of the new value of your car by using online sources like Kelley Blue Book’s market value estimates.
How to file a North Carolina diminished value claim
Filing a North Carolina diminished value claim is similar to filing any other insurance claim. Either you or an attorney will need to contact the insurance company of the at-fault driver to request diminished value compensation—because let’s be real, the insurance company is probably not going to offer up more money than it has to.
In your request, you’ll need to include proof that your vehicle has lost value, which is why it’s best to get your appraisal done by a professional. It’s usually a good call to include any relevant documentation and photos/videos of your vehicle’s damage as well.
If you and the insurance company cannot come to an agreement on the compensation and the difference in each compensation recommendation is more than $2,000 or 25% of the vehicle’s market value, North Carolina General Statute 20-279.21
states that a third-party appraiser can evaluate the situation and offer their take on the diminished value. You will then have 15 days to decide if you want to accept the offer, drop the claim, or move forward with a lawsuit against the at-fault driver. The 17c formula: free diminished value calculator
If you want to calculate the diminished value of your vehicle after an accident, you can use what is known as the 17c formula. Most experts use the 17c formula during diminished value appraisals, and while it may not be an exact formula, it is a great way to estimate how much loss your vehicle’s value has sustained.
To begin, you’ll need to look up the value of your vehicle prior to the accident. Everything from the vehicle’s make, model, and age to its general condition and mileage count impacts its value, so be as diligent about the details as possible. Again, Kelley Blue Book has great resources for estimating a car’s market value.
Once you have that number, multiply it by .10 (10%) to find the base loss value. Then, apply a damages multiplier and a mileage multiplier to that figure. The damages multipliers are:
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
Whatever number you get from that multiplication needs to be multiplied again by a mileage multiplier:
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
The final figure is an estimate of your diminished value.
What is the statute of limitations for a diminished value claim in North Carolina?
There is a three-year statute of limitations on diminished value claims in North Carolina. That means you will have three years from the date of the accident to file a claim, after which time your claim will be rejected.
The bottom line
North Carolina allows drivers who are not at fault in an auto accident to make diminished value claims, but you must remember to file the claim yourself or through an attorney. Insurance companies aren’t going to remind you of your right to compensation. To have the best chances of success, try to include an unbiased third-party diminished value appraisal and any photo/video evidence of the damages.
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