A diminished value claim seeks compensation for a sudden drop in the value of your vehicle, whether it’s due to a car accident, shoddy repairs, or the lingering effects of damage.

As for who can file a claim, who pays for it, and the compensation received, we’ll have to turn to Texas law.

Types of diminished value

In Texas, there are three types of diminished value (also known as “diminution of value”):

Immediate diminished value is the difference between the value of a vehicle before a car accident and immediately after, without any repairs having been made.

Repair-related diminished value is the difference between the value of the car before and after it receives substandard repairs, such as a shoddy paint job or cheap parts.

Inherent diminished value is the difference between the value of the vehicle before a car accident and its value after it receives repairs. The car may have received quality repairs, but its resale value has been diminished by the car accident, whether due to lingering issues or the negative perceptions of potential buyers.

When people say “diminished value” in Texas, they’re usually talking about “inherent diminished value.” Unless we specify otherwise, that’s the meaning we use in this guide.

Diminished value versus depreciation

Diminished value refers to a sudden drop in a vehicle’s market or resale value, while depreciation describes a gradual value reduction due to wear, tear, and time. Nearly all cars depreciate, but not all cars suffer diminished value.

Imagine you’re shopping for a used car and you find a pair of 2013 Toyota Camrys with 100,000 miles on each of their odometers

The only difference between the two is their accident histories—one is spotless, while the other has two strikes on its

driving record

Everyone knows a car involved in an accident may have structural damage that could manifest issues down the road

Which would you choose? The choice is obvious, and that’s the origin of the concept of diminished value. Whether or not the second Camry malfunctions in the future, its accident history makes a difference to its value—a difference that diminished value claimants seek to address.

Key Takeaway An inherent diminished value claim in Texas targets the difference in a vehicle’s resale value before and after a car accident, even if it receives top-quality repairs.

MORE:

How to determine the retail value of your used car

How to file an inherent diminished value claim in Texas

An inherent diminished value claim in Texas is no different from any other type of car insurance claim. You’ll need to do your research, gather evidence, and take a deep breath before taking the plunge into bureaucracy.

Is my car eligible for a diminished value claim in Texas?

Before wasting your time and energy, take a moment to ask yourself the most important questions:

Does Texas support diminished value claims? Thankfully, Texas is a diminished value state, which means your right to make a claim is protected by state law

Am I within the statute of limitations on diminished value claims? The

car insurance claim limit

in Texas is two years from the date of the accident.

Was I at fault for the car accident?

Comparative negligence law in Texas

prevents anyone more than 50% at fault for a car accident from claiming damages.

Do I own the vehicle? If you aren’t the outright owner of your vehicle, it’s best to contact your lessor or lender to discuss making a claim (and how any proceeds will be split) before proceeding.

Do I have proof of the diminished value of your vehicle? You must be able to prove and attach a dollar value to the diminished value experienced by your vehicle (more on that later).

If you answered yes to four or more questions, you’ve got the green light! Let’s proceed.

How do I file a Texas diminished value claim?

Filing a successful inherent diminished value claim in Texas requires proof of your car’s value before the accident, proof of the accident, and proof of your car’s value after the accident. Here’s a step-by-step guide on what to do:

Find proof of your car’s value before the accident. You can get an idea of your vehicle’s pre-accident value by looking at

Kelley Blue Book

Edmunds

, or

NADA

vehicle valuation listings.

Gather proof of the accident. Police reports, witness statements, and your own notes and photographs are an excellent source of evidence that you weren’t at fault.

Determine the diminished value of your car. Try the 17C formula or find listings for cars with a similar make, model, and accident history as yours to compare to the pre-accident value. We recommend hiring a professional to conduct an official diminished value appraisal appraisal so you have expertise and documentation on your side.

Submit your claim. Call the at-fault party’s insurance company and ask to submit a third-party claim. You’ll be assigned an insurance adjuster and instructed on where to send your documents.

Wait for the adjuster to make a decision. The adjuster will consider all the evidence before letting you know if your claim has been approved and denied.

If your claim is approved, congratulations! If not, know that you still have recourse—you can hire a personal injury lawyer or car accident attorney and file a personal injury claim in small claims court.

If you feel the insurance company is in the wrong, you can also

submit an auto insurance complaint to the Texas Department of Insurance

MORE:

Diminished value calculator: How to calculate your claim

Will my insurance pay for diminished value in Texas?

There are only a few situations in which you can file a diminished value claim against your own insurance company, also known as a first-party insurance claim.

You were struck by an at-fault, uninsured motorist and you have Uninsured Motorist Property Damage (UMPD) coverage

You have a car insurance policy that includes diminished value claims (a rarity in Texas)

You were struck by an at-fault motorist that doesn’t have sufficient liability insurance to pay for your car’s lost value

Know that if you make a first-party claim, Texas state law doesn’t oblige insurance providers to approve your diminished value claim if your vehicle has been repaired to a re-accident state

MORE:

How to file a car insurance claim

FAQ

How do you calculate diminished vehicle value in Texas?

There are three ways to calculate diminished vehicle value in Texas:

Use the 17C formula

Compare sale listings for models that resemble your car before and after the accident

Hire a professional to conduct an appraisal

We recommend the last option: An appraiser has experience and legitimacy on their side, and they’ll give you printed documentation to support your claim.

When can you claim diminished value in Texas?

You can file a diminished value claim in Texas anytime within two years following the date of the accident.

Do I need a lawyer for a Texas diminished value claim?

It’s a good idea to hire a qualified Texas car accident lawyer or law firm to represent you. They’ll help you gather proof, add costs to your claim that you might not think of, and negotiate a fair settlement.