How To Calculate Diminished Value

Let’s face it: no matter which way you slice it, car accidents are never fun.

On top of dealing with repairs and insurance, getting into an accident – even if your car is repaired perfectly – automatically lowers the value of your vehicle.

When you get into an accident, a Carfax report is created that’s available for anyone and everyone to see.

This report shows that your car has been involved in an accident, and when you go to sell your car, it will make your vehicle less attractive than a vehicle of the same make and model that’s never been in an accident – even if the damage to your car from the accident is undetectable.

In order to sell, you’ll have to lower your price to stay competitive, which means hundreds (or even thousands of dollars) out of your pocket.

But you don’t have to lose money on your car when you get into an accident, thanks to a little something called diminished value.

What is diminished value?

If you’re not familiar with diminished value, according to Wikipedia, the definition is “the economic loss in a property’s value as a result of having been damaged;” in this case, your vehicle.

So, when you get into an accident, the diminished value is the decrease in value of your car because of the damages caused by the accident.

How much value does a car lose after an accident?

The depreciation value of a car after an accident can vary greatly; obviously, a minor fender bender that scratches your bumper is going to cause a smaller loss in value than a major accident that completely totals your vehicle.

If you want to protect the value of your vehicle, it’s important that you get professional support and calculate car value after the accident.

Many drivers end up walking away from hundreds or thousands of dollars they’re rightfully owed simply because they didn’t take the proper steps to protect themselves, their vehicles and their investment.

How do you calculate diminished value?

There are two ways to calculate diminished value that you need to know about: the way insurance companies determine diminished value and the actual diminished value of your car.

Most insurance companies use what’s known as the “17c formula for diminished value.”

The formula got its name from the State Farm diminished value claim where it was first used and refers to the area where it appeared in court records: paragraph 17, section c.

After the formula was used in this particular case, it quickly became the industry standard diminished value formula for insurance companies.

The 17c formula is as follows: Base Loss of Value (which is calculated at 10% of the current Kelley Blue Book value) X Damage Modifier X Mileage Modifier = Diminished Value.

The 10% is the maximum amount the insurance companies will pay out on your vehicle; no one is exactly sure where this 10% number came from, but it’s been widely adopted as the go-to maximum payout for these kinds of claims.

The damage modifier has to do with – you guessed it – just how damaged your car is following the accident.

Interestingly, insurance companies only take structural damage into consideration when determining diminished value, not mechanical damage.

So the only damages that count towards your diminished value have to do with the structure of your vehicle.

The damage modifiers are as follows:

  • Severe structural damage: 1
  • Major damage to structure and panels: 0.75
  • Moderate damage to structure and panels: 0.50
  • Minor damage to structure and panels: 0.25
  • No structural damage: 0.0

The mileage modifier adjusts the diminished value of your car based on how many miles have been put on the car.

Obviously, the higher the mileage, the lower the value.

The mileage modifiers are as follows:

  • 0 – 19,999 miles: 1
  • 20,000 – 39,999 miles: 0.8
  • 40,000 – 59,999 miles: 0.6
  • 60,000 – 79,999 miles: 0.4
  • 80,000 – 99,999 miles: 0.2
  • 100,000+ miles: 0

So, for example, let’s say you were driving a car with a Blue Book value of $15,000 that had 36,000 miles and moderate structural damage.

Your 17c formula would look like this:

$1500 (10% of the Blue Book Value) X .50 X .8 = $600

So, according to the insurance company’s diminished value calculator, your diminished value would be $600.

But that’s not the ACTUAL diminished value of your car.

To figure out the real diminished value, you’ll need to do a bit of detective work.

First, find out the value of your car pre-accident; again, you can find this information on Kelley Blue Book.

Then, you need to calculate the value of your car post-crash.

Most law firms get their estimates by multiplying the original value by .33.

You can also look at cars of a similar make and model that have been in accidents to get a ballpark estimate of how much your car is worth.

Then, subtract the post-accident value of your car from the pre-accident value of your car and that will give you the actual diminished value.

So, using the example from earlier, let’s say your car was worth $15,000 before the accident:

  • $15,000 – ($15,000 X .33) = $10,050
  • $15,000 – $10,050 = $4,950

So, with this example, the 17c diminished value of your car was $600 but the actual diminished value was $4,950.

The insurance companies – whether it’s your insurance policy or someone else’s – are always going to try to pay out the least amount of money possible; that’s how they stay in business.

Which is why it’s so important to screenshot this free diminished value claim calculator: when you’re armed with the right information, you won’t leave thousands of dollars on the table by accepting the insurance company’s 17c offer.

And with all this information available for free online, there’s no reason not to get the most out of your claim.

How do you file a diminished value claim?

That’s where Loss Value Recovery Specialists come in.

We’ll work with you on your diminished claims to get a diminished value payout that makes sense for you, not the insurance company.

We’ll handle the entire process and even negotiate with the insurance company – all you have to do is sit back and wait for your check.

Have questions on how to calculate your diminished value? Ready to get started?


Click here to get your claim started today.

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