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- A diminished value claim helps car owners recover some of the difference between their car’s pre-accident value and its value after repairs.
- If you are at fault in a car accident, your own collision coverage probably will not pay for any diminished value.
- When the other driver is at fault in an accident, start by filing a claim with their insurance company before you file a diminished value claim.
Diminished value refers to the drop in your car’s market value after it’s been in an accident. Even if it’s fully repaired, the accident can still show up on the vehicle history report and make the car less appealing to buyers.
A diminished value claim can help you recoup some of that drop in value after an accident. We’ll cover everything you need to know about diminished value and how to make a diminished value claim.
What is diminished value?
Diminished value is the difference between the actual cash value of your vehicle before the accident and after the accident.
A car that has never been in a crash may be worth $15,000, but that same car with an accident history will typically be worth significantly less. There’s a way to make up the difference: a diminished value claim.
Diminished value insurance claims allow car owners to recover some of the difference between a car’s pre-accident value and its value after repairs.
Types of diminished value claims
There are three types of diminished value claims:
- Inherent diminished value: It’s the most common type of diminished value claim and refers to the fair market value of your vehicle after it is repaired after an accident.
- Repair-related diminished value: This diminished value claim is based on the premise that no repair, however thorough, can fully restore a vehicle to its pre-accident condition.
- Immediate diminished value: This type of diminished value claim only occurs if the vehicle is sold immediately after the accident and before repair.
How to file a diminished value claim
File a diminished value claim against the at-fault driver’s insurer, not your own. To build your case, document your car’s pre-accident value, get a trade-in value letter from a dealer and have an appraiser assess its post-repair value.
Here are the steps to filing a diminished value insurance claim:
- Step 1: Contact the at-fault driver’s insurance company as soon as possible
- Step 2: Document pre-accident private party value
- Step 3: Get a trade-in value letter from a car dealer
- Step 4: An appraisal will be done to calculate diminished value, but learn how to calculate it yourself, too
- Step 5: Satisfy all conditions of the claim
An appraisal is the first step to a successful claim once you’ve contacted the insurer, even if you don’t plan to sell the car, says Richard Hixenbaugh, owner of Collision Claim Associates. The diminished value is based on how much less money the car would be worth if you were to sell it.
That loss in value can result from repairs that did not restore the car adequately — mismatched paint, for example — or simply because the car’s history is now tainted.
About 70% of used cars are sold to dealers, Hixenbaugh says. These dealers will look up a car’s history to see whether it has been in an accident. Many private buyers will, too.
You can get a pre-accident private party value from online resources such as Edmunds.com or Kelley Blue Book. Then you must document the value of your car after the repairs are complete.
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First-party vs. third-party diminished value claims
Not all diminished value (DV) claims are treated the same. Whether you can collect depends on who you’re filing against and what state laws allow.
- First-party claim (your own insurer):
- In most states, your insurance policy does not require your insurer to pay you for diminished value when you’re at fault.
- Many courts have upheld the standard auto policy’s coverage for repairs, not for loss of resale value.
- However, there are a few exceptions in which courts or state laws have required insurers to pay DV in first-party cases (rare).
- Third-party claim (the at-fault driver’s insurer):
- If another driver causes the accident, you can often pursue diminished value from their liability coverage.
- In many states, courts have ruled that the at-fault driver’s insurer is responsible for the reduction in your car’s market value — not just the cost of repairs.
- Success rates vary by state, but third-party DV claims are generally more enforceable than first-party ones.
Expert tipMost successful diminished value claims are third-party filed against the at-fault driver’s insurance because standard auto policies rarely cover DV for your own vehicle.
How to calculate a diminished value claim
Insurance companies use a formula called “17c” to determine your car’s monetary value after a crash. Critics call it arbitrary and claim it undervalues cars.
You’ll benefit more from a higher diminished value, so it’s wise to know how the insurer will arrive at its number, and how that compares to your calculation of the car’s value if you sell it after a collision. If there’s a big gap between the numbers, you may be able to negotiate a better deal.
How to calculate diminished value using the 17c formula
Step 1: Look up the market value of your car at the NADA or Kelley Blue Book websites. You need the mileage, make, model and details about the damage to do this.
Let’s assume your market value is $15,000.
Step 2: Apply a 10% cap to the value by multiplying the market value by .10. There is no documentation for why insurers apply this limit, which is why the 17c formula is controversial. At any rate, it sets the maximum amount your insurer will pay for your diminished value claim.
$15,000 x .10 = $1,500 is the maximum amount the insurer will pay out on a diminished value claim.
Step 3: Multiply for damage. This does not account for mechanical damage, only structural damage, which is another reason critics dislike the formula. Take the number you arrived at in step two ($1,500), and multiply it by the following number that best describes the damage to your car:
| Multiplier | Damage level |
|---|---|
| 1.00 | Severe structural damage |
| 0.75 | Major damage to the structure and panels |
| 0.50 | Moderate damage to the structure and panels |
| 0.25 | Minor damage to the structure and panels |
| 0.00 | No structural damage or replacement |
Let’s assume you had severe structural damage. $1,500 X 1 = $1,500
Step 4: Deduct more of the value by applying the mileage to the formula to reach the final 17c value.
Of course, mileage is already factored into your car’s market value, but insurers still penalize it with an additional mileage demerit. Multiply the number you arrived at in step three ($1,500) by the appropriate number from the list below to arrive at the final diminished value of your car using the 17c formula:
| Multiplier | Mileage |
|---|---|
| 1.00 | 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 |
Note: Let’s assume the vehicle has 10,000 miles. $1,500 X 1 = $1,500
Which states allow diminished value claims?
If the accident was your fault, don’t expect to get coverage for diminished value. Very few states will allow this, according to the Insurance Information Institute.
Most insurance policies have language in their collision section that clearly states the insurer will not cover diminished value when you are at fault.
The situation is different, however, if another driver is at fault. If another driver is at fault, all states except Michigan allow for compensation of diminished value.
Laws generally state that a third party in an accident must make the accident victim “whole” following a wreck. That includes restoring the car to its pre-accident fair market value.
Typically, the driver’s liability insurance will cover the claim.
In some cases, drivers do not carry car insurance, even though they are legally obligated to do so. One of these uninsured drivers may be at fault in an accident that damages your vehicle.
In such instances, about half of U.S. states allow the accident victim to recover diminished value under uninsured motorist coverage. However, not all drivers carry this insurance, so you won’t be able to recover diminished value without it.
“In the majority of cases, it’s considered the vehicle owner’s responsibility to prove their loss,” Hixenbaugh says.
| State Type | Examples | Notes |
|---|---|---|
| States that allow diminished value claims | Georgia, North Carolina, Washington, Arizona, Florida | Courts generally support DV claims against the at-fault driver’s insurer. Georgia is especially favorable. |
| States that limit diminished value claims | California, Illinois, Texas, Colorado | DV claims are possible, but recovery may be restricted by case law, insurer practices, or policy wording. |
| States that generally ban or reject diminished value claims | Michigan, New York, Pennsylvania | Courts or laws typically do not recognize DV claims against your own insurer or in most accident cases. |
Frequently Asked Questions: Diminished value claims
When should you file a diminished value claim?
File your claim as soon as possible. By doing so, you’ll be able to recoup the costs sooner, and you’ll have all the necessary information on hand for the damage done to the car and the accident report.
The more technical answer is that it varies by state. Most have a two-year time frame to file a diminished-value claim, but not all. In North Carolina, for example, the statute of limitations is 3 years, while in Missouri it’s 5 years.
If, for some reason, you can’t file a diminished value claim immediately, it’s best to determine how much time your state gives you to file a claim.
Does filing a diminished value claim raise my insurance rates?
Not directly if you weren’t at fault. However, any accident claim may influence your risk profile and lead to higher premiums in the future.
Can I file a diminished value claim if I was at fault?
Usually no. Most insurance policies don’t cover diminished value in first-party claims when you caused the accident. DV claims are more successful when filed against the at-fault driver’s insurer.
How do you negotiate a diminished value claim?
Reach out to the at-fault driver’s insurance company and ask about their process for diminished value claims. Gather proof of your car’s value before the accident and after repairs using Kelley Blue Book or NADA. Support your claim with photos, the accident report and a valuation from a dealer or certified appraiser. If the insurance company does not make a fair offer, consider whether hiring a lawyer is worth the potential recovery.
Do all auto insurance companies allow diminished value claims?
In all states except Michigan, if an accident is the other driver’s fault, the insurance company should consider a claim for diminished value. The insurance company might deny your claim, and you may have to fight to receive what you deem is fair.
In the end, it may come down to a time/cost analysis on your part.
The bottom line
Whether a diminished value claim is worth it depends largely on your car’s value and how much money you stand to recover. If you have a newer or high-value car, the potential payout may justify paying for an appraisal or hiring a lawyer.
For an older car or a smaller claim, the costs may outweigh the benefits. Appraisal fees, attorney fees or court costs can quickly eat into any settlement.
Diminished value claims can also take persistence. Insurers may deny the claim, argue that diminished value does not apply, or offer only a small amount based on an industry formula. As Hixenbaugh notes, it’s often a negotiation.
If you can’t reach a fair settlement on your own or through an appraisal company, the court may be an option. But for many drivers, that only makes sense when the potential recovery is large enough to justify the time and expense.
Sources
- Insurance Information Institute. “What is diminished value?” Accessed July 2026.
- Collision Claims. “Collision claim Associates.” Accessed July 2026.
- Kelley Blue Book. “New and Used Car Price Values, Expert Car Reviews.” Accessed July 2026.
- National Automobile Dealers Association. “Consumer Vehicle Values.” Accessed July 2026.
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