Diminished Value Calculation: Everything You Need to Know

Getting the correct diminished value claim is an arduous task. Know how to file a diminished value claim by reading on.

Car accidents can be extremely upsetting. In addition to injuries and damage to your car, the accident could lower the value of your car, even if it is fixed up perfectly. The difference between your car’s market value before and after the accident is what is meant by “diminished value.” If an accident causes harm to your vehicle’s value, knowing about diminished value can help you make a successful claim.

What is a diminished value? 

Even if your car goes through the process of getting it back to the way it was before the accident, its market value will go down. The difference between your car’s market value before and after an accident is its diminished value. Even if you try to sell your car, reports show that if a car has been in an accident, it will make it worthless on the market. A diminished value claim can help you get the money you need to get your car back to the market price it had before the accident. 

Different types of diminished value 

Inherent diminished value 

This is the most common and accepted way that a car’s value goes down after an accident. Inherent diminished value is when a car’s value goes down because it has been damaged before, which shows up in the car’s history report. This type of diminished value assumes that the car was fixed in the best way possible and shows how much its value will drop because of its accident history. 

Immediate diminished value 

This type of vehicle’s diminished value is the difference between the car’s resale value right after an accident and before it’s fixed. Most damage repairs are done right away by your insurance company after an accident, so this kind of diminished value is rarely used when filing a diminished value claim. 

Repair-related diminished value 

This means that the car’s value has gone down because of bad repairs done after an accident. For example, if the paint is fixed with a color that doesn’t match exactly or if aftermarket parts are used instead of original equipment manufacturer (OEM) parts, the quality of the repair lowers the value of the car even more than the accident did. This lower value is based on the idea that the car can’t be fixed up to the way it was before. 

How to calculate diminished value 

Learn about your state vehicle laws

Learn the laws in your state about diminished value claims before you file one. State laws tell you if you can make a diminished value claim against your own insurance or the other driver’s insurance and how to figure out a diminished value claim. Also, all states have a law called a “statute of limitations” that says you have to file a claim within a certain amount of time. 

Find out how much your car is worth on the market

Use the website of the National Automobile Dealers Association (NADA) to find out how much your car is worth. You can put specific information about your car onto the website to get an accurate value. Such sites have a calculator where you can put in some information about your car. You will need to write down the car’s year, make, model, mileage, and how much damage it has. 

Calculate the value lost

The base loss of value for a car that has been in an accident is calculated by dividing the NADA guide value by 10. This tells you how much a car’s value is likely to drop after an accident. When figuring out diminished value, some insurers don’t use the base loss of value in their calculations. 

Damage multiplier

Once you know the base loss of value, you then multiply that amount by the corresponding multiplier from the damage multiplier table.  

Damage Type	Damage Multiplier
Severe structural damage	1.00
Major structural damage (including panels)	0.75
Moderate structural damage (including panels)	0.50
Minor structural damage (including panels)	0.25
No structural damage/No replaced panels	0.00

Mileage multiplier

In addition to the amount of damage, you must also take into account the total number of miles your car has been driven. The table below shows the different multipliers based on how many miles are on your car’s odometer: 

Number of Miles	Mileage Multiplier
0 to 19,999 miles	1.0
20,000 to 39,999 miles	0.8
40,000 to 59,999 miles	0.6
60,000 to 79,999 miles	0.4
80,000 to 99,999 miles	0.2
100,000+ miles	0.0

Figure out the total value lost 

First, multiply the base value of loss by the damage multiplier. This gives you the final amount for a diminished value claim. Then, multiply the damage-adjusted value by the mileage multiplier to find the total amount of your claim. 

Even though different car insurance companies use different methods, you can get a good idea of how much you can expect from a diminished value claim by using the information above. 

When you sell a new car, you should be able to get what you paid for it. Even though an accident can lower this value, filing a claim with your car insurance company for “diminished value” can help you get back any money you lost because of the accident. 

When and how to file a diminished value claim 

When the other person is at fault in a car accident, you should file a claim for diminished value to get back the value of your car. Most insurance policies say that you can’t file a claim against your own insurance company for decreased value. You should file a claim for diminished value as soon as possible, preferably in the days after the accident, because states have time limits on property claims. Even though the amount of time you have to file a claim is usually measured in years, it is easier to do so soon after an accident.

Also, keep in mind that you’ll need to give an estimate of your car’s market value during the claims process and that the value will go down as time goes on. Every state has its own laws about diminished value, which you can find out about from your state’s insurance department. In the following states, drivers can get money from the insurance company of the person who caused the damage: 

• Arizona 
• Colorado 
• Florida 
• Georgia 
• Illinois 
• Indiana 
• Iowa 
• Kansas 
• Louisiana 
• Maryland 
• New Mexico 
• New York 
• Oregon 
• South Carolina 
• Virginia 

To file a diminished value claim, contact the insurance company of the person who was at fault. This is called making a claim against a third party. Don’t forget that a third-party appraisal can help you negotiate with the insurance company. Every insurance company has its own way to handle claims for lost value. Be ready to go to small claims court if the at-fault party’s insurance company won’t accept your claim for diminished value. 

---

Here’s more info on top-rated airport parking, the best parking spots in your city, affordable auto insurance, easy auto refinance and high-quality car washes near you. 

---