Diminished Value Claims: after a Car Accident What Insurers Often Refuse to Pay

Diminished value is the difference between what your car was worth immediately before the accident and what it is worth now that it has a documented history of damage. If you were to put your car on a lot today, a buyer would demand a discount compared to an identical car that was never hit. That discount is your "diminished value."

Modern repairs can be excellent, but they cannot erase the "stigma" of an accident. When a vehicle is sold, the history report acts as a permanent record. Dealerships often refuse to take accident-damaged cars as "Certified Pre-Owned," further driving down the market value. Essentially, the repairs restore the function, but not the financial standing of the asset.

In most states, you can only file a diminished value claim against the at-fault driver’s insurance company (a third-party claim). If you were the one at fault, or if you live in a state that prohibits first-party diminished value claims, you may be unable to recover this loss from your own insurer.

The claim should generally be initiated after the physical repairs are complete. This allows for a forensic evaluation of the "post-repair" condition. However, you must act before the statute of limitations for property damage expires in your jurisdiction, or you will face a terminal loss of your right to sue.

The "sweet spot" for a diminished value claim usually involves:

• Newer Vehicles: Cars less than 5 years old.
• Low Mileage: Generally under 60,000 to 80,000 miles.
• High Market Value: Luxury brands (Tesla, BMW, Porsche) or high-demand trucks and SUVs.

If the damage was purely cosmetic (a small scratch), the loss in value might be negligible. However, if there was structural or frame damage, the loss in resale value will be significant, even if the frame was straightened to factory specs.

Many insurers use a formula known as "17c," which originated from a Georgia court case. This formula applies a 10% cap to the vehicle’s value and then applies "multipliers" based on the severity of damage and mileage.

Note: SJKP LLP often challenges this formula because it is inherently biased toward the insurer and frequently results in an underpayment of the true vehicle value loss.

Insurance adjusters may argue that:

• The repairs returned the car to "as-new" condition.
• The car already had high mileage, so the accident didn't matter.
• The market for your specific model is so strong that no one cares about the accident history (which is almost never true).

A printout from a website is rarely enough to win a disputed claim. You need an expert appraisal from a professional who understands the local car market. This report acts as the "forensic record" of your loss, detailing what the car would have sold for versus what it will sell for now.

You must provide a complete "paper trail," including the final repair invoice and the initial estimate. This allows the appraiser to see exactly which parts were replaced and whether the structural integrity of the vehicle was compromised.