After a car accident, most drivers focus on getting their vehicles repaired and dealing with any medical issues. But even after your car is fixed and back on the road, its value might not be the same. That’s because of something called diminished value—a hidden financial loss that many accident victims don’t even realize they’ve suffered. “Diminished Value After a Car Accident”
So, what is diminished value, and can you be compensated for it? The short answer is: yes, but it depends on your situation, your insurance policy, and whether you pursue the claim properly.
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What Is Diminished Value?
Diminished value is the loss in your car’s market value after it has been in an accident and repaired—even if the repairs were done perfectly. Most buyers simply aren’t willing to pay the same price for a car that’s been in a collision.
Example:
Let’s say your car was worth $25,000 before the accident. After the crash and full repairs, it’s appraised at $21,000. That $4,000 difference is your diminished value.
Even if your car looks flawless, vehicle history reports (like CARFAX) will show the accident, which decreases resale or trade-in value.
Types of Diminished Value
There are three types of diminished value claims you might encounter:
✅ 1. Inherent Diminished Value
This is the most common type. It refers to the loss in market value simply because the car has an accident history—even if it’s fully repaired.
✅ 2. Repair-Related Diminished Value
This occurs when the repairs don’t restore the vehicle to its original condition (e.g., mismatched paint, aftermarket parts, or alignment issues).
✅ 3. Immediate Diminished Value
The difference in your vehicle’s resale value immediately after the accident—before any repairs are done. This is rarely used but may come up in total loss situations.
Who Can File a Diminished Value Claim?
Whether or not you can file depends on who was at fault, your insurance coverage, and state laws.
You MAY be eligible if:
- Another driver was at fault for the accident.
- You file a claim through the at-fault party’s insurance.
- You live in a state that allows third-party diminished value claims.
You MAY NOT be eligible if:
- The accident was your fault and your own policy doesn’t cover diminished value.
- You have liability-only insurance (no coverage for your own vehicle).
- You’ve already accepted a property damage settlement without including diminished value.
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How to File a Diminished Value Claim
Filing for diminished value requires more effort than a standard property damage claim. Here’s how to do it right:
✅ Step 1: Get an Appraisal or Diminished Value Report
You’ll need a professional evaluation showing the difference in your car’s value before and after the accident. There are companies that specialize in this, or your attorney may connect you with a qualified appraiser.
✅ Step 2: Send a Demand Letter to the Insurance Company
This should include:
- The appraisal report
- A summary of the repairs
- Proof of the vehicle’s pre-accident value
- A request for payment based on the calculated diminished value
✅ Step 3: Negotiate with the Insurance Adjuster
Insurance companies will often deny or undervalue diminished value claims. Be prepared to negotiate and push back with evidence.
📢 Let an Attorney Handle the Insurance Negotiations for You 📢
How Is Diminished Value Calculated?
There’s no universal formula, but insurers often use the 17c formula, which includes:
- Pre-accident market value
- A damage multiplier (based on severity)
- A mileage-based depreciation factor
💡 Be aware: the 17c formula often results in lowball offers. A private appraiser may provide a more accurate valuation.
Will My Own Insurance Cover Diminished Value?
Generally, no. Most policies do not include diminished value coverage unless:
- You have a specific rider or endorsement that includes it
- You live in a state where first-party diminished value claims are allowed (very few do)
If the other driver is at fault, their insurance may be obligated to pay diminished value—even if yours won’t.
When Should You File the Claim?
Don’t wait too long. Most states have a statute of limitations, typically ranging from 1 to 4 years. But it’s best to file the claim soon after the property damage is resolved—and definitely before accepting any final settlement.
Common Challenges with Diminished Value Claims
Insurance companies may deny the claim outright
Adjusters may argue your car was already depreciated
You may be told your vehicle is too old or has too many miles to qualify
Offers may be far below fair market loss
Having an experienced attorney by your side can help overcome these obstacles and maximize your payout.
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What Types of Cars Qualify for Diminished Value?
Diminished value applies to almost any vehicle, but it’s more significant with:
- New or late-model cars
- Luxury vehicles
- Cars with low mileage
- Vehicles with clean accident histories
If you own a high-value or newer vehicle, diminished value can amount to thousands of dollars in lost resale value—don’t ignore it.
Final Thoughts: Don’t Leave Money on the Table
After an accident, most people focus on immediate costs like repairs and medical bills. But if you don’t pursue diminished value, you could be walking away from real financial losses that impact your car’s resale or trade-in value.
Even if your car looks brand new again, buyers and dealers will know it was in a crash—and they’ll offer you less. The good news? If the other driver was at fault, you may be entitled to recover that loss.
Key Takeaways:
Diminished value is the loss in resale value after your car is repaired
You can be compensated—especially if the other driver was at fault
Most standard insurance policies do not cover diminished value claims
You’ll need documentation, an appraisal, and persistence to win
An attorney can help file the claim and fight for the full amount
📢 Get a Free Case Evaluation and Protect Your Vehicle’s Value 📢
Diminished Value After a Car Accident
