Diminished Value Accident Claims

DIMINISHED VALUE ACCIDENT CLAIMS

Diminished value is calculated by determining a vehicle's value before a collision and subtracting the vehicle's value after the accident and repairs. The difference equals the vehicle's diminished value. Insurance companies, like GEICO, Allstate, and State Farm, rarely pay this value in property damage claims. 


So when an insurer pays to repair your vehicle does not - because it cannot with CarFax - restore the car to its pre-loss condition, the insurer must compensate its insured for the diminished value resulting from the irreparable damage you have suffered.


Many personal injury cases are with victims getting a sneak preview of how the insurance company will treat them in the property damage claim. Insurance companies do not settle serious accident claims - not typically, anyway - until far later down the road when the client has recovered or reached maximum medical improvement (the healing has come as far as it will). 


Property damage claims are immediate, so it gives the victim the first glance of the extent to which the insurance company will fight tooth and nail to deprive them of what they’re entitled. Loss of value claims are tailor-made for insurance companies not to play it straight.

Insurance companies do not play fair when it comes to the diminished value of the victim's vehicle. By taking advantage of victims, they save hundreds of millions of dollars a year. We all know that the minute the dealer looks at CarFax. They see the car has been wrecked and they automatically give you less on your trade-in. This is the definition of diminished value.

Theoretically, the law is exactly what it should be. Texas law allows the victim either (1) the cost of repairing the vehicle and the loss of value of the vehicle because of the accident, or (2) the fair market value of the car if it is a total loss.


The key word there is "and." The insurance company is responsible for both. Because a repaired vehicle will likely have a reduced value as a result of its history of being in a crash. Under Texas law, compensation for diminished value is required under the basic principle that the injured party should, insofar as possible, be restored to their original position before the accident.


So, this is not complicated. There are few tort claims you can solve with a calculator, and this is one of them. It is a simple calculation.

If a plaintiff can prove that after repairs his vehicle has a diminished market value from being injured, then he can recover in addition to the cost of repairs the diminution in market value, provided the two together do not exceed the decrease in value before the repairs. That is the calculator to use to prove diminished value on a car, not 17c or KBB diminished value calculators many want to use. The lost value is the actual lost value, not some formula that projects diminution of value without considering the actual vehicle at issue. 


So Texas law is that plaintiffs may recover damages for the diminished value of their property under either trespass, nuisance, negligence, or strict liability.


Sounds great. The problem is that insurance companies, at least in Texas, ignore diminished value claims. How? They uniformly refuse to pay its policyholders and third-party claims when the vehicle has sustained damages that decrease the resale value. 


Yes, Texas law allows plaintiffs to bring a diminished value claim. But, practically, the insurance companies understand that most lawyers will not touch diminution of value claims unless they are connected to a serious injury claim.


So, for most diminished value accident claims, no one is willing to hire an expert and file a lawsuit. So, unless you take them to the courthouse steps and beyond, these diminished value claims are unlikely to get paid.



This problem has become an even bigger deal with the rise of CarFax which allows everyone to quickly check the accident history of a vehicle. This cuts down the market for potential buyers when you go to sell the car.

The most surefire way to beat the insurance company in a diminished value claim is a long way -- a lawsuit.

What is the answer? Well, if you have been seriously injured in an accident, your lawyer may be willing to push the ball on your diminished value claim. 


If not, there are not a lot of great options. The best is not the one you want to hear: push the insurance company by filing suit on diminished value, let them know you know you need an expert and line one up, and then settle your claim for the best value you can get.



  • Property damage claims: how they work and how can you put yourself in a position to get the best deal.
  • Personal Injury Victims Help Center (information on everything you want to know about personal injury claims)
  • Demand Letter to Insurance Company (template demand letter for compensation to the insurance company in personal injury - not property damage - case)

What is Diminished Value?

The law may entitle you to be compensated for the damages to the car (known in lay terms as a property damage claim) in addition to the loss of value of the car. This loss of value is referred to as “diminished value.”

Is a Diminished Value Claim Worth It?

Whether a diminished value case is worth it depends on how unreasonable the insurance company is. The juice is not worth the squeeze if the insurance company is shorting you $100. But if there are thousands of dollars involved, that is a very different story.

How Do I Make a Diminished Value Claim?

How to make a diminished value claim is a little bit tricky because it is rare that your case is going to justify retaining a lawyer and it is unlikely a lawyer would take a diminished value claim on a contingency fee basis.


But for small value claims, most courts make it pretty easy to make a claim and they relax rules of evidence and other legal technicalities that can make bringing a legal claim a challenge. In Maryland, it is pretty easy to bring a lawsuit for less than $5,000.

Does Insurance Pay for Diminished Value?

Some insurance companies pay for diminished value and others do not. But clearly paying victims less is a path for the insurance companies to make a great deal of money.

What Is the Average Diminished Value Claim?

There are no real statistics that give an average diminished value settlement claim value. No calculator will give you an exact amount for your claim. The appraisal of the vehicle has some subjective elements to it so any diminished value calculator you find online is likely to be of limited value.



More globally, some have estimated that insurance companies pay accident victims an average of 10% that what they deserve. So while our lawyers can cite an average, there is no question that insurance companies habitually pay victims less than the true value of the property damage claim.

Can You File a Claim for Diminished Value?

.As we discussed a few questions above, you can absolutely file a lawsuit for a diminished value claim.

Are Insurance Companies Required to Pay Diminished Value?

Insurance companies are required to pay the diminished value of your vehicle from a car accident. The problem is that to make them pay what you are owed, you are often required to file a lawsuit.

How will I be able to get compensation in this situation? (When am I eligible to make the claim?)

You can typically only get compensation for this type of loss in Texas if 1.) You are involved in an accident and 2.) You are the owner of the car involved and 3.) You are making a claim against the other at fault driver’s policy. It’s important to note that if you are making a claim for property damage under your own collision policy, you will not be able to claim diminished value in Texas. Other states may have different rules in this respect. Our attorneys regularly handle diminished value claims. If you would like to discuss whether you are eligible to make a claim, please feel free to contact us for a free consultation.

Why do I need an attorney to handle a [city] diminished value claim?

You don’t necessarily. There is nothing to stop you from making this type of claim on your own without a lawyer. Just keep in mind, in today’s world where information is available instantaneously by internet or fax, if your accident has made its way into the “Car-Fax” system, it will almost certainly have an effect on your ability to sell your vehicle if it has been involved in an accident before. Most people will check “Car-Fax” or will want to know if the vehicle was involved in previous accidents and whether or not there was frame damage or other serious damage to the vehicle. I encourage clients who don’t need or are unwilling to hire a lawyer to make these claims so they are not surprised later on when they go to sell the vehicle and have already settled their case.



Notwithstanding the above, an experienced attorney will work with you and fight the insurance companies on your behalf to get you maximum compensation for the lost value of your vehicle, and so it is often a good idea to hire one. Especially if you have also been injured in the accident. Many lawyers will handle the diminished value claim in addition to your bodily injury claim at no extra charge to you!

Keep in mind that if you have a vehicle that is worth a lot of money or a newer car, the value of the car is more likely to decrease significantly after an accident, even if the car is repaired well!

How is the compensation for the loss of value determined? How do I know how much less my vehicle is worth, now that it has been in an accident and repaired?

The most persuasive way to make these claims is to have an expert determination made. You can always try to make your case to the insurance carrier using Kelley Blue Book Values or other comparable asking prices for cars with accident histories, but you may not be able to pinpoint the actual value diminishment unless you have an expert take a look at the estimates.


Assuming you have a lawyer, once the repairs of your vehicle are complete and you are satisfied with the repairs, the attorney will hire an expert to assist you in determining the loss of value to the vehicle or “diminished value”. The expert can then determine what the value of the vehicle was before the accident and what the value of the vehicle is after the accident and the difference is calculated to be the diminished value. The expert will prepare a detailed report and your attorney will use that report and fight the insurance company to get them to compensate you for that loss. If you do not have a lawyer, consider hiring your own expert or relying on comparable.


You may also be able to hire an expert on your own. As an attorney, my critical consideration here is making sure we hire someone who not only knows what they are talking about, but also someone who is qualified to testify in a court of law as an expert in case the insurance company refuses to pay and we are forced to file a lawsuit. Frequently, when we file a lawsuit for an injured client where property damage claims are unresolved or have been resolved unsatisfactorily resulting in a vehicle with loss of value, I will include a count in the complaint for diminished value and will subpoena an expert to trial to testify on their report. I have also seen some lawyers subpoena body shop or engine mechanics in as experts as well. I am not comfortable relying on these types of experts because some judges will permit their testimony on the issue and others will not. A qualified diminished value expert on the other hand, is less likely to be stricken as an expert on the issue.

What can I do to assist the attorney and provide documentation to prove the diminished value claim?

If your car is in very good condition, and you have a way to prove that with mechanic records, receipts for parts, oil changes, any maintenance records and pictures then you need to provide these to your attorney. Also, if you have a mechanic that worked on your car prior to the accident, then ask that person to write a letter regarding the condition of the vehicle prior the accident. You could also go to a dealership that will tell you how much your car is worth after the accident and have the put it in writing. You would have to tell them that the car was involved in the accident.

What if my personal injury attorney won’t handle my diminished value claim?

If you are already represented by a personal injury attorney and are concerned about your diminished value claim, we recommend generally that you call your existing lawyer and ask them to handle this portion of your claim for you in addition to your injury claim. We regularly handle diminished value claims for all of our personal injury clients in addition to their injury claims. If your personal injury lawyer is not willing to handle both your injury and your personal injury claim together, you may want to consider switching to another lawyer who will.

Expert Witnesses for Diminished Value Claims

A diminished value calculator that computes the exact value of the loss on the vehicle that a court could rely upon would make these claims a lot easier to manage. But there is no formula for these appraisals. The loss of value depends on the type of car, the type of collision, and a host of other facts.


Keep in mind that there is arguably a flaw in using a blue book calculation. Some argue that 90% of cars today are sold below blue book value. Why? It is common practice for trade-ins to take rebates, incentives, and other discounts available to the automotive dealership and add them to the trade-in value of a car during a new car purchase.


This artificial appraisal inflates the trade-in value of the car. Why do dealers do this? Buyer assumes they are getting a better deal when they get more for their trade-in. It gives the seller credibility that they are fair. The reality is that they are just giving you more on the trade-in and charging you more on the car. This reality improperly inflates the value of cars. Be prepared for this argument with the insurance adjuster and at trial.


You may need an expert to bring a diminished value claim to appraise your vehicle and to calculate the inherent loss to the Plaintiff's vehicle following the crash. This is the best way to prove a diminished value claim.

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