Diminished value (DV) is the loss in a vehicle’s market price after a crash even when repairs are completed. Accident history appears on vehicle-history reports and can reduce what buyers will pay, which is why DV is discussed by regulators and industry sources such as the Insurance Information Institute, the National Association of Insurance Commissioners, and state insurance departments.
You’ll most often encounter DV when selling or trading in your car. Under standard personal auto policies, your own collision or comprehensive coverage usually does not pay for DV because most policies exclude “diminution in value.” If another driver is at fault, you may pursue DV from that driver’s liability insurer as a third-party claim, subject to your state’s rules and your evidence. Uninsured/underinsured motorist (UM/UIM) coverage typically does not include DV. See guidance from the Washington Office of the Insurance Commissioner, the Texas Department of Insurance, and the Insurance Information Institute.
Types of Diminished Value Claims
Inherent Diminished Value
Inherent diminished value is the loss a properly repaired car still suffers because buyers discount vehicles with an accident history. Regulators and industry sources describe this as a recoverable element in many third-party claims when another driver is legally liable; proof typically requires market-based valuation evidence. See the NAIC and Washington OIC.
Immediate Diminished Value
Immediate diminished value reflects the vehicle’s worth right after the crash but before repairs. It is less commonly used and generally appears in valuation disputes where pre-repair value must be documented. See the NAIC.
Repair-Related Diminished Value
Repair-related diminished value occurs when the quality or nature of repairs lowers market value — for example, visible paint mismatch, non-OEM parts where OEM is expected, or residual cosmetic/fit issues after structural or ADAS-related repairs. Documentation of the repair scope and any calibrations helps substantiate this loss; see consumer guidance from Texas TDI and Washington OIC.
When to File a Diminished Claim
Consider a DV claim when another driver is at fault and your state recognizes third-party DV as part of property damage. Many states allow third-party DV, but requirements and practices vary. Michigan is a notable exception for motor-vehicle collisions: its no-fault Property Protection Insurance (PPI) pays for damage to tangible property and, in practice, does not pay inherent DV; see Michigan’s PPI statute. By contrast, other states provide consumer guidance on pursuing third-party DV, such as North Carolina and Texas. If you are seeking payment under your own policy, most standard forms exclude DV unless your policy expressly provides it. In some jurisdictions, courts have addressed first-party DV differently depending on policy language (e.g., Georgia; compare with Texas and Massachusetts).
Example: If you’re rear-ended by another driver and your bumper is replaced, you would typically seek DV from the at-fault driver’s liability insurer (a third-party claim). If you back into a lamppost and claim under your own collision coverage, DV is generally excluded under standard policy language; see the Insurance Information Institute and Texas TDI.
Before filing, complete repairs or obtain thorough repair estimates and assemble documentation: pre- and post-loss valuations, repair invoices, photos, and a professional appraisal if possible. Act within your state’s property-damage time limits (often several years, varying by state), and keep detailed records. See steps and tips from Washington OIC and Texas TDI.
When Is Diminished Value Covered?
Under your own collision or comprehensive coverage (first-party), DV is generally not covered because most auto policies exclude payment for “diminution in value.” If another driver is at fault, you may seek DV from that driver’s liability insurer as a third-party claim, depending on state law and your evidence. UM/UIM typically does not cover DV. See the Washington OIC, the Texas Department of Insurance, and the Insurance Information Institute.
What if the Other Driver Is Uninsured?
If the at-fault driver is uninsured, your UM/UIM coverage usually does not include DV. You may pursue the at-fault driver directly, negotiate with the insurer if coverage applies for other damages, or consult your state insurance department on dispute options. See the Washington OIC for steps and escalation paths.
How to File a Diminished Value Claim
Confirm fault first. If you are at fault and relying on your own policy, DV will usually be excluded. If you were not at fault, contact the other driver’s insurer about its third-party DV process. Build a valuation file (pre-/post-loss values, repair records, photos, vehicle-history report, and an independent appraisal), follow any inspection requirements and timelines, and check state rules and deadlines. Consumer resources from Washington and Texas outline typical steps and how to escalate disputes.
- Step 1. Document your car’s sales value: Use a tool such as Kelley Blue Book to document your car’s value.
- Step 2. Research the insurance company’s process and gather required documents: Gather the documents required in the claim process, such as photos taken at the accident scene, a professional appraisal or market comps, repair estimates/invoices, and a vehicle-history report.
- Step 3. Identify the state in which you are applying: DV rules differ. Many states permit third-party DV when you were not at fault; Michigan’s no-fault PPI focuses on tangible property and generally does not pay inherent DV in vehicle-to-vehicle collisions. First-party DV depends on your policy language and state law. Check your state DOI guidance (e.g., WA, TX, GA, MI).
- Step 4. Find a licensed appraiser: Seek a reliable, licensed appraiser to quantify DV with an independent report supported by market evidence.
- Step 5. Satisfy all conditions set by the insurance company: Cooperate with the adjuster and meet documentation and inspection requirements to keep your claim moving. You can negotiate and, if needed, complain to your state DOI or consider small-claims/civil court.
- Step 6. Wait for the diminished value claim: The insurer may have an expert inspect your vehicle and may present a formula- or appraisal-based offer; you can submit additional evidence or escalate if you disagree.
How Diminished Value is Calculated
Many insurers reference a “17c” formula as a starting point to estimate inherent DV, but no law requires its use. The approach traces to Georgia litigation and is commonly discussed in consumer guidance; regulators emphasize there is no single mandated method, and market‑based appraisals are often used alongside or instead of 17c. See Georgia Consumer Protection, Washington OIC, and the NAIC.
Below, you’ll see how 17c is typically described and how to produce an illustrative estimate. Always compare any 17c figure with current market evidence and, if possible, an independent appraisal.
How 17c works:
Step 1. Identify the sales value of your car: Determine the pre-loss value using tools like Kelley Blue Book and comparable listings.
Step 2. Follow the 10% cap rule on the 17c formula: Multiply the retail value of the car by 0.10 to estimate a “base loss of value.” This cap is not legally mandated and may understate DV for certain vehicles; it is negotiable.
Step 3. Apply a damage multiplier: Use a damage multiplier to estimate the impact of structural and panel damage. You can take the number from step two and multiply it by the number that best describes the damage to your car:
- 1: severe structural damage
- 0.75: major damage to structure and panels
- 0.50: moderate damage to structure and panels
- 0.25: minor damage to structure and panels
- 0.00: no structural damage or replaced
Step 4. Apply a mileage multiplier: Legacy 17c uses a mileage factor after step three, but modern valuations often already account for mileage. To avoid double-counting, use market tools that embed mileage adjustments (e.g., KBB and Manheim MMR) and ensure your DV estimate compares vehicles at similar mileage; regulators note there’s no single required method (NAIC).
- 1.0: 0-19,999 miles
- 0.80: 20,000-39,999 miles
- 0.60: 40,000-59,999 miles
- 0.40: 60,000-79,999 miles
- 0.20: 80,000-99.999 miles
- 0.00: 100,000+ miles
Once this step is completed, treat the result as a starting point. Cross‑check with a market‑based appraisal or comparable sales, and consider data‑driven tools used by carriers (e.g., CCC Diminished Value) and vehicle‑history impacts from sources like CARFAX History-Based Value.
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