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Tuesday, October 19, 2021

Diminished Value Claim After Car Accident – Steps To Calculate

The value of car reduces after it has been in an accident, no matter if the owner has done all the repairing services and made it brand new. Depreciation on car after accident is inevitable, its value will decrease if it has been in any kind of accident. Sometimes a successful diminished value claim can earn the owner the amount difference between the car’s previous value and the value after repairing all the damages. Registering a diminished value claim after car accident is very hectic because the inconvenience of providing the car’s diminished value is the dependability of the owner.

Diminished Value Claim

diminished value claim TexasDiminished value claim after car accident is mostly denied to the car owners if he/she were at fault for the accident. But if the other car which was an accident with you is the reason behind this wreck, then you should definitely contact the car insurance company. Let’s take an example; suppose you want to sell a car which was in an accident recently and you want to sell the car for $20,000. Someone might be willing to buy the car, but when they learn about the accident history in which the car was involved the buyer will lower the offer to $16,000. In this case, the diminished value of the car is $4,000. 

In other words, the value of the car is $4,000 less than its original price.

  • The different types of diminished value:

The diminished values are generally of three types and each type relates to the depreciation on car after accident.

  1. The most common type, Inherent Diminished value – occurs when a car has a long history of damages. It is presumed that in this type, the repairs done on the vehicle were of ideal quality and represent the amount of the vehicle’s value will reduce corresponding to the history of accident and damages.
  2. Immediate Diminished value – in this type, the diminished value corresponds to the contrast in the value of resale right after the accident and the value of car prior to its repair.
  3. Repair-based Diminished value – in this type, the value of car is based on the low-quality repairs done after the accident.
  • Calculate car value after accident: 

 depreciation on car after accidentThe diminished value formula used to calculate car value after accident or diminished value is 17c, which is commonly used in most car insurance companies. To obtain or calculate car value after accident, the following steps are used.

Step1. To determine the car’s value – This can be done by using the National Automobile Dealers Association’s or NADA’s website to obtain the value of car. You need to input the car’s specific details in order to get an absolutely accurate value. 

Step2. Calculating the base loss of value – the insurance company implements a cap of 10%, which is also termed as the base loss of value to the value of car estimated by NADA.

Step3. To apply damage multiplying factor – to adjust the base loss of value, certain insurance companies use the damage multiplying factor, known as the multiplier. The cap value of 10% is multiplied by any number ranging from 0.00 to 1.00. This value is an adjusted number for diminished value based on the insurer’s examination of the damage. The zero multipliers are for no structural damage or replaced panels whereas the one multiplier is for vehicles with acute structural damages.

  • 1.00 multiplier – harsh structural damage
  • 0.75 multiplier – heavy structural damages and damages to the panels
  • 0.50 multiplier – moderate structural and panel damages
  • 0.25 multiplier – slight structural and panel damages
  • 0.00 multiplier – no structural damage at all

Step4. In this step, a mileage multiplying factor is applied, based on the number of miles traveled by car as shown by its odometer, the mileage multiplying factor reduces the newly adjusted base loss of value.

  • 1.00 multiplier – 0.0 miles -19,999 miles
  • 0.80 multiplier – 20,000 miles -39,999 miles
  • 0.60 multiplier – 40,000 miles -59,999 miles
  • 0.40 multiplier – 60,000 miles -79,000 miles
  • 0.20 multiplier – 80,000 miles-99,999 miles
  • 0.00 multiplier – 1, 00,000+ miles.

calculate car value after accidentTo calculate the diminished value or car value after accident under formula 17c, you have to take the vehicle value, multiply it with a 10% cap. After this, depending on the damage faced by the car, apply damage multiplying factor and a mileage multiplying factor depending on the mileage.


  • Some considerations while registering a diminished value claim:

When filing a diminished value claim, the company may not give you a full payout. Certain factors that affect the claim of value are:

  • The value of car prior to the accident – one may not be able to receive a payout for diminished value claim, if the vehicle is very old and has a lot of damages structurally.
  • Whether the driver was at fault – if you were responsible for the accident, then the car insurance company will not be paying a diminished value claim.
  • If a driver, who is not insured, is involved with you in an accident – you may file a diminished value claim if you have uninsured motorist coverage with the insurance company of your car.
  • The state you live in – different states have different laws for diminished value claim.

Diminished value claim after car accident may not always recover the difference in the value of car.

  • Diminished value claim Texas:

One may qualify for the diminished value of the vehicle after an accident in Texas which is also known as a diminished value state. In Texas, the statute of limitation on diminished value claim is 2 years and also Texas has uninsured motorist coverage for the diminished value of the car. But one cannot submit a Diminished value claim, Texas if one was at fault at the time of the accident or if the damages faced by the car were not due to the accident but due to something else.

Diminished value is calculated considering the following things in Texas: types of damages suffered by the vehicle, the quality of repair, the cost of similar vehicles that were never involved in an accident, other market trends. The factors corresponding to the Diminished value are:

  1. value of carAge of vehicle – Insurance companies are reluctant to pay diminished value on cars over seven years of age.
  2. The mileage of the vehicle – Vehicle mileage greatly affects the value of car.
  3. History of accidents – if the vehicle has a history of other accidents in the past, then the value of the vehicle will already be diminished.

Insurance companies in Texas use the same formula, 17c to calculate the car value after accident.

  • Diminished value claim Texas: how can you qualify?

  1. The vehicle is not leased, if one is leasing the vehicle, they are not eligible.
  2. The accident was not the owner’s fault.
  3. The current accident is the first accident that has ever occurred to the car.


 claim of valueIt is best to file a diminished value claim if your vehicle was in an accident and the other party was at fault during the accident. You might recover the vehicle’s value with your claim of valueDiminished value claims after car accident, are denied to those who were at fault during the time of the accident. The process of diminished value claim is a difficult one, but if the value of car is significantly less even after repairing it and making it almost new, then filing a claim of value can help to compensate the loss.

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Daniyel Carlson
Daniyel Carlson is a Young Researcher in the field of Data Science & Analytics having research experience of more than 8 years. He has a Masters in Computer Engineering and currently serves as an Editorial Assistant in IGI Global, United States of America. Daniyel also holds honorary positions in the Associate Member of Institute of Research Engineers and Doctors, International Association of Computer Science and Information Technology, International Association of Engineers, Society of Digital Information and Wireless Communications.

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