What is a Diminished Value Claim?

A car can lose its value over time. One of the main factors that can reduce the value of a car is depreciation, which is the normal wear and tear of a vehicle due to its use. But if the car is in an accident, this could also significantly reduce its value. You can file a claim with an insurance company to recover the diminished value. Diminished value is the difference in the market value of your car before and after an accident.

Why is Diminished Value Important?

If your car is in an accident and has been damaged, you must report it to the authorities. It will be noted by your insurance company as well. This will affect your car’s resale value even after being repaired. The diminished value reflects that your car cannot be restored to its condition as before the accident occurred.

The insurance company will calculate the value of a vehicle after an accident using the 17c Diminished Value Formula. This is a standard formula that originated in a claims case in Georgia against State Farm Bank. The formula appeared in paragraph 17, section c, where it got its name. 

How to Calculate Diminished Value

As mentioned above, the diminished value of your car will be calculated using the 17c formula. The following are the steps you can take to calculate the diminished value of your car.

  1. Calculate the Market Value of Your Car

You can calculate your car’s sales or market value using information from the Kelley Blue Book or NADA websites. Both of them have a calculator through which you can find out the value of your car. You just have to input the details regarding the year of manufacture, the model of the car, the mileage it has covered, and the extent of damage caused.

  1. Apply a 10 Percent Cap to this Value

The insurance company will normally apply a 10 percent cap to the sales value of your car as calculated using NADA or the Kelley Blue Book. This is called the base loss of value. It is the maximum value that you can expect the insurance company to offer you on your claim.

  1. Apply a Damage Multiplier

The insurance firm will use a damage multiplier to adjust the vehicle’s value further. The 10 percent cap value is multiplied by a number between 0.00 and 1.00, depending on the structural damage to your car because of the accident. The 0.00 multiplier is used when there is no structural damage, while the 1.00 multiplier is used for vehicles with serious structural damage. 

  1. Apply a Mileage Multiplier

The insurance firm will use its own mileage deduction and apply it to the value in step 3 to calculate the final diminished value of your car.

Is a Diminished Value Claim Worth it?

The insurance company will not consider your request for diminished value if you cause the accident. However, you can file a claim if the other party is at fault. You should do this as soon as possible in the days after the accident, keeping in view the statute of limitations in your State.

Filing a diminished value claim can be a difficult process. However, if your vehicle is worth significantly less after an accident, even after it has been restored close to its original condition, filing a claim for the vehicle’s diminished value could compensate in part for the significant loss in value

Getting the Compensation You Need

Hopefully now you feel up to speed on diminished value claims and how they are calculated after an accident. If you are at a loss regarding processing this claim, you should reach out to an experienced Orange County accident lawyer for help.


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