How to Make a Diminished Value Car Insurance Claim

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Want to help make sure you recoup the full value lost in a car accident? Learn how to make this special kind of claim, courtesy of our friends at CarInsurance.com

The point of car insurance is to make you whole again after an accident.

But no matter how expertly repaired, a car with an accident history will likely be worth less than one without–even if the car looks as good as new and runs better than it ever has.

A car that has never been in a crash may be worth $15,000 at resale but thousands less if it has been in an accident and repaired. There’s a way to make up the difference: a diminished value claim.

diminished value claim

Diminished value insurance claims allow car owners to recover the difference between a car’s pre-accident value and its value after repairs.

Don’t expect the insurance company to help.

Some car owners file on their own, but others hire a private company to document the lower value. If the insurance company resists, owners may have to take them to court.

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“It’s definitely a challenge,” says Shane Fisher, an attorney in Winter Park, Fla. “You have to put up a fight.”

Before and After

If the accident was your fault, don’t expect to be able to claim diminished value against your own policy. Few states — and few insurance contracts — allow it. The same applies to cars that are flooded but not totaled out; you typically can’t file for diminished value against your own coverage.

But if someone hits your car, nearly every state allows diminished value claims from an at-fault party’s insurance company. Even if the person who hit you is uninsured, about half of the states allow diminished-value collection on your own uninsured motorist property damage coverage. (See “Why you don’t have enough uninsured motorist coverage.”)

Even so, “just because state law allows a diminished value claim doesn’t mean insurers are required to pay it,” says CarInsurance.com consumer analyst Penny Gusner. “Don’t expect the process to be easy.”

For a successful claim, you’ll need an appraisal of the car’s value both before the accident and after the repairs have been done.

“In the majority of cases it’s considered the vehicle owner’s responsibility to prove their loss,” says Richard Hixenbaugh, owner of Collision Claim Associates, a company that charges $300 to $400 to document a loss of value.

Making a Diminished Value Insurance Claim

An appraisal is the first step to a successful claim, even if you don’t plan to sell the car, Hixenbaugh says. 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 come because repairs did not restore the car adequately — mismatched paint, for example — or simply because the car’s history is now tainted. About 70 percent of used cars are sold to dealers, Hixenbaugh says, who will look up the history of a car to see if it has been in an accident. So, too, will many private buyers.

“No one is going to offer you more money because your car was in a major accident,” Gusner says.

You can get a pre-accident private party value from online resources such as Edmunds.com or Kelley Blue Book. Then you must document what your car is worth after the repairs have been done.

Fisher, the attorney, recommends getting a trade-in value letter from a car dealer stating that the lower value is due to previous damage done to the car, even though it has been repaired.

Now for the Hard Part

You will have to ask the other party’s insurance company to be compensated for the diminished value. You may have to ask more than once. (See “What you need to know about car insurance claims.”)

It’s a negotiation, Hixenbaugh says. Some insurers may maintain that there is no such thing as diminished value, or offer a token amount calculated by an industry formula.

Companies like Collision Claim Associates inspect cars, review repair documents, offer sample letters that drivers can submit to insurers, and advise owners on what to say to an insurer. About 75 percent of his company’s customers are successful in getting paid for their diminished value claim, though not always for the amount they’re seeking, he says.

Those unable to find satisfaction on their own or using an appraisal company may have to turn to the courts. Many claims may fall underneath your state’s small-claims threshold, allowing you to present your own case.

But for most people, the cost of an attorney doesn’t make sense, Fisher says, either because they’re driving older cars that are “rolling total losses” and aren’t worth much, or the claim is so small that it will get lost in legal fees. A car worth less than $10,000 isn’t worth filing a claim on or hiring a lawyer for, he estimates.

An expensive or almost-new car, though, may be worth the effort.

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LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. The individuals interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services. LearnVest Planning Services and any third-parties listed, discussed, identified or otherwise appearing herein are separate and unaffiliated and are not responsible for each other’s products, services or policies.

  • ksgirl73

    The part I don’t understand is why you have to wait until the car is repaired. I just had an accident on Sunday in a car I only had 8 days. The other party was at fault, and admitted it to the police officer, and was cited. I’m already up to $7000 in damages not including any mechanical repairs on a car worth roughly $15000. Why would a company go through the process of repairing something that they may have to put out another $5000 in diminished value if they are told this before the car is repaired? Seems like they would be smarter to buy it off you or settle another way rather than stretching things out and having to pay more in the long run.

    • dmw

      this is my opinion which makes sense in my head… more likely the car will be totaled. if you add diminished value to a claim, it counts towards total repair. if your total bill is 9k and your car is worth 15k, you’re bordering on total loss on its own. if you add in 6k for diminished value, then you’re up to 15k and that’s the cost of the car, which would most definitely be total loss. I may be wrong but it makes sense to me…

      • dmw

        a short version is, if you file it before it’s repaired, they may total it out because it’s added to the repair. if you wait till after the repair, you get your car back plus the diminished value (if it’s not total loss to begin with)

        • ksgirl73

          They don’t add the diminished value to the repair. I did find out that threatening to sue the other driver for the diminished value does help get your car totaled though.

      • ksgirl73

        Apparently they can’t claim diminished value until after it’s repaired. By that point I wouldn’t have wanted it anyway. Luckily it was totaled.

    • JW

      Try this site http://www.dvprocessing.com. I had great service from them in detail.

      • ksgirl73

        Too late, they ended up totaling the car.

    • fcbmjax

      My car had 36 miles on it and I just settled a diminished value claim. Much higher priced car then yours. You DO NOT have $5,000.00 in diminished value. They take the current retail value of the car and what the retail value is after the car has been repaired and the difference is what your diminished value is. If you scroll down you will see my case. They ended up paying $14,000.00 in repair, $1200.00 for a car rental for 36 days and $7850.00 in diminished value but my car was worth $35,000.00 at the time of the accident. You will be close to having it totaled but if they don’t you might get $3,000.00 in diminished value if you are lucky. Retail before vs. retail after is what you are entitled to.

    • Curly Sue

      My car was not repaired and I sold it as a wreck but The St. Lucie Appraisal Company from Fort Pierce, FL advised me well that I do not need to have my car fixed to claim diminished value. Their Diminished Value appraisal was for $7,325 and I received a check for that amount from The Farmers Insurance Company.

  • Joseph Johnson

    We used http://www.autodamageclaim.com
    They got us over $6,500 for our diminished value claim against Geico. We didn’t have to do any work, they took care of everything and we deposited the check!

  • JosephJohnson

    We used the claim experts at AutoDamageClaim.com to help us with our diminished value claim. We got $4,500 and they did all the work!

  • Monsterlab

    I was recently in an accident and the other driver was at fault. She only has $10K in property damage coverage, which won’t be enough to cover the damage to my car. The car is brand new (not even a month old), and will likely not be totaled. Can I still file a diminished value claim, even though there isn’t any money left in her policy to pay out? My insurance company told me that I cannot file a diminished value claim with them. It would have to be through the other driver’s insurance.

    • ksgirl73

      I researched diminished value a lot last year when my 8 day old car was hit. It varies by state so it’s best to look up the laws for the state you had the accident in. Most insurance companies won’t touch it, but you can sue the other driver for the diminished value. After the car is repaired you would need to get a formal appraisal to determine what it is worth now after the accident. Then, depending on your state you may have a year to 18 months to file a claim for diminished value in small claims court. Luckily mine was totalled, but I had already picked up the forms from the courthouse and was ready to file if it hadn’t been totaled. Hope it works out for you.

    • me

      Hello Monsterlab,
      I am in the same exact predicament. The other driver was at fault and only has $10K in property damage coverage. My damages right now are $8K but may increase once car is taken apart. My insurance will not allow me to file a claim through them. Were you able to file diminished value claim?

      • Monsterlab

        Is your insurance covering the cost of repairs? I still haven’t gotten my car back yet (it’s been almost 3 months!), but since the at-fault party’s coverage was so low, I had my insurance pay for the repairs out of my collision policy, and they will seek reimbursement from the other party’s insurance. I contacted their insurance and let them know that I was going this route, and they sent me a check for $500 to cover my deductible.

        I contacted my insurance and let them know that I planned on filing a diminished value claim with the other party’s insurance, and that the payment for that would come out of whatever reimbursement they received from that $10,000 allotment. I then called the other driver’s insurance and told them the same thing. I was told that they will not issue any payment to my insurance company until after my diminished value claim has been settled. So basically, I’ll put in the claim and they’ll pay me out of the available $10k first, then whatever is left over will go to my insurance company. They will probably end up pursuing the driver personally for whatever is left over.

        This is all in theory, as I can’t do anything until I get the car back. Good luck!

        • Beth

          You should underinsured on your policy which there was a case in Indiana that won diminished value in the Supreme Court.
          I am going through similar BS, one week old van rear ended by a county car, her fault. I want the van replaced and we are stuck negotiating over week while my van sits. We are debating over $3K, trading in my van for a new one or them repairing. They have offered $900 for diminished value but it hasnt even been fixed yet. Looks like we both have a long road ahead.

  • Vu

    Question I just got into a car accident a week ago. Sideswipe on freeway guy told police he looked around saw no cars then a truck was about to merge into his lane so he went into mine and hit me.

    I called police right away after I got hit pictures stories exc..

    I got home called my insurance told them the story. Couple days later called my insurance again asked what my step is they told me to call their insurance which was allstate. I called them there was a claim all ready on that report and wanted me to come to one of their offices to have it checked.

    I went there couple days ago extimated damage was 3.3k had to repair pasenger door and fender buff out rims. I don’t know what my next step is I have been told if I want money then I would have to go to a small claims court or chiropractor is there anyway to get money from this event. I drive 2013 128i cost 48k after taxes just got it 5 months ago any help would be great.

    • http://overthetopgolf.com OverTheTopGolf

      You may file a diminished value claim against Allstate. My advice is to make sure that you hire an independent appraiser who formulates his diminished value appraisal using Dealer quotes ONLY. Auto auction results and formulas using damage modifiers are a complete waste of time as is hiring one of the DV appraisers that advertises on the top and right side of a Google page when you look up “diminished value appraisers.” Also, check the BBB as there are a lot of unscrupulous appraisers out there. Don’t want to be a spammer so I won’t say who we hired but I will say that they are from Florida and they did a great job. Allstate will still try to lowball you but hang tough, make a complaint to the insurance dept. in your state, threaten legal action, etc. All part of the diminished value game.

  • Curly Sue

    Here is a pretty good Q & A from an independent appraisal company that handles diminished value claims.
    http://autodiminishedvalue.com

    • http://www.theautomediator.com the auto mediator

      You deserve the best advice and experts like JD Howard at Insurance Consumer Advocacy Network can tell you how and what your rights are. He is extremely knowledgable and wont take your money without great results and advise you the best course of action. I am not him and I do not get paid an incentive fee.

  • fcbmjax

    Saturday I purchased a vehicle and on Sunday a guy ran into the side of the vehicle. It only has 38 miles on it. YES you read that correctly 38 miles. He crossed over the divider and was ticketed for driving on the wrong side of the road. He would have hit me head on if I didn’t swerve to the right. Side airbags deployed. Unfortunately they are going to repair the vehicle because I paid $36,000.00 for the vehicle and the repair estimate so far is $12,000.00. I have already asked for a diminished value settlement because I intend to replace the vehicle. Both my car and his are insured by State Farm. Fortunately he has $50,000.00 in collision. been out of work all week. Hired a lawyer yesterday.

    • Juscalmeric

      What happened with your case?

      • fcbmjax

        The repairs ended up being closer o $14,000.00. They had the car in the shop for 36 days. They paid for my rental car for the duration. Got my car back and they did a much better job then I was expecting. Because the airbag deployed no car dealer can sell it on their lot but it has a 5 year warranty on it and since the dealer did the repair the manufacturer must honor the factory warranty or deal direct with State Farm over any future problem/dispute. I made an agreement with State Farm to let an outside appraiser of my choice do the diminished appraisal and they agreed with who we chose (got his name from the dealer). We both agreed to go by what he said. I wanted $10,000.00 they offered $6,000.00. We ended up settling on $7850.00 which they have paid. Injury lawsuit still pending. Decided to keep the car through the warranty since trading it now would be to large a hit and as I mentioned the car seems to be running/looks good with no shakes, noise or vibrations.

        • RadarJohn

          Hello fcbmjax: Your new vehicle price and repairs are almost identical to my new vehicle that was recently damaged by another at-fault driver. Can you disclose the name of the diminished value appraiser that you used as I just received an extremely low-ball diminished value offer from the at-fault insurance company.

          • fcbmjax

            John you will need to find someone local. I used North Florida South Georgia Appraisal Service. I got them from the dealership that did the car repair (Autonation Lincoln) who is a certified State Farm repair center. Ask some of your local dealers who they recommend. My car is a 2014 and actually had a $45,000.00 price tag but I got a bunch of discounts and rebates off and got the car down to $36,000.00 since the 2015′s had just arrived. It didn’t lose that much value driving it off the lot so the retail value was still close to what I paid for it. Basically they take the current retail value of the vehicle and what it would retail sell for after the accident and difference is what you are entitled to. Unfortunately selling the car outright for retail is out of the question for you and a dealership will now only give you the wholesale trade value of the car. This is why we decided to keep our car. Since the dealer did an excellent job repairing the vehicle and we still have 5 years of warranty I figure in 5 years the value of the car if not in the accident would have been about $20,000.00 so if I trade it in 5 years and get around $13,000.00 then with the money I got for the diminished value I will be at square one. Good luck.

          • RadarJohn

            fcbmjax, it is amazing how close the details and the price values of your new vehicle and damages are compared to my vehicle and damages. My vehicle was brand new and I got t-boned by another driver. Thank you for the information.

  • Jackie

    Hi, I recently was in an accident ( NJ/their fault) and i have a 2009 BMW with low mileage. The auto body had my car for 2 weeks and the damage was 5,000k in back damage of my car. I was going to sell it soon and I now lose value because of the accident. Their insurance company offered my 1,500 for Diminished car value loss however i really will lose about 6000k when i go to sell it. They said they can submit a new loss to see if that can get a higher number to pay me vs the 1500 but if its lower then they cant offer me the original 1500k.. should i just take the $1,500 or see what else they can do?

  • Chuck

    I was in a car accident a week ago where a driver hit my 2015 Sierra Denali 4X4 that I bought new 3 weeks prior. The truck I purchased was $49,000 with a MSRP of 56000. The truck is so new, I have not received plates for it yet from the dealer. I am in the state of SC. I talked to the repair shop and they informed me that it will be 13000 to 15000 dollars to repair. Do I have to wait until the truck is repaired to claim diminished value or can I ask for it now? I do not want the truck back because it was all front end driver side damage which made my passenger side door unable to open. I was told that it doesn’t have frame damage but I don’t believe them. I filed against my issuance company even though the other driver admitted fault and the repair shop is a Direct Repair shop for my insurance company. Should I take the truck to the dealership? Can I have a appraisal come out and do Diminished Value done before the repair? Will the other person’s insurance company purchase my truck from me because I don’t want it?

    • ksgirl73

      Technically you have to wait until the truck is repaired to file a diminished value claim. However you have other options. You can sue the other driver in a civil court for the value. It also helps to become friends with the guys at the body shop. I had a similar thing happen and told them I wanted to car totaled so they called the appraiser out again and pointed out some additional things. If you don’t like the repair shop your truck is at now, you can move it to another one. I had to fight my insurance company hard, but eventually they totaled my 8 day old Corolla. Good luck.

  • Heather Weatherholt

    I bought a brand new car on October 30th last year, and while on my way home from work on November 24th – the same day my first payment was cashed – I was rear-ended. It was considered un-drivable, and between waiting until I could get a police report, the holiday, an adjuster, etc., it was a little over a week before I got it in to be repaired. Was in the repair shop for right at 3 weeks. By the time I got the car back, I had owned it 7 weeks, and had it in my possession for 3, and had made 2 payments on it. I don’t know if I will have any luck, but I am working on getting diminished value now.

  • Savanna Gasca

    Thought-provoking ideas . I was fascinated by the info ! Does anyone
    know if I might access a blank template form
    to type on ?

    • Hang Abarca

      Greetings Savana. my business partner found a sample OR Form 8.010.5 version using this http://goo.gl/vVef3Q