Diminished Value Claim in 2025 (How to File & Win!)

A diminished value claim helps you recover the loss in your vehicle’s market value after an accident, even after repairs. Policyholders must understand their rights since insurance companies often fail to inform them about this option.

Three types of diminished value exist: immediate, inherent, and repair-related. Your claim’s success depends on state laws, insurer policies, and how well you prove the loss. Some states allow first-party claims if you have collision coverage, while third-party claims depend on the at-fault driver’s insurance.

To strengthen your case, you may need a professional appraisal or legal guidance. Insurers often challenge these claims, so knowing the process improves your chances of compensation.

Understanding your eligibility and legal options ensures you don’t leave money on the table. Enter your ZIP code for more information on filing a diminished value claim in your state.

Understanding What a Diminished Value Claim Means

A diminished value (DV) claim lets vehicle owners seek compensation for a car’s loss in market value after an accident, even if they’ve fully repaired it. However, not everyone can file a diminished value claim—it depends on state laws, insurance policies, and who was at fault.

Third-party claims against the driver in an at-fault accident are the most common.

Some policies cover first-party DV claims under collision insurance, but many exclude it. Some states allow first-party DV claims (e.g., Georgia, North Carolina, Kansas).

Stronger claims for newer, low-mileage, or well-maintained cars are more likely to be successful, as are DV claims on leased or financed vehicles.

Read More: How Insurance Companies Determine a Vehicle’s Value

Types of Diminished Value Explained

After an accident, your car can lose value—even if you repair it completely. Buyers see the accident history and often walk away or offer less. That drop in value is called diminished value. If the accident wasn’t your fault, you may be able to get compensated. Here are the three types of diminished value that could apply to your situation.

• Immediate Diminished Value: This represents the drop in market value immediately after the accident but before repairs. It’s rarely claimed, as insurance companies focus on post-repair valuation, but is used in legal cases where an accident prevents a vehicle from being sold at its pre-accident price.
• Inherent Diminished Value: This is the most common form of diminished value in insurance claims — when a repaired vehicle is still worth less than a similar car with no accident history. Even with perfect repairs, buyers and dealers perceive the car as less valuable due to its accident history.
• Repair-Related Diminished Value: This happens when improper repairs from poor workmanship, use of aftermarket parts, paint mismatches, or structural weaknesses further reduce the vehicle’s value beyond the accident’s impact. It’s more difficult to prove, but you may seek compensation if repairs were substandard.

Even high-quality repairs using original parts cannot restore the vehicle’s pre-accident value. Because of this, insurance companies may be responsible for paying the difference in value through a diminished value claim.

Diminished value claims vary by state auto insurance laws, insurance company policies, and fault determination. Some states allow first-party claims under collision coverage, while others limit compensation to third-party claims against an at-fault driver’s insurer. Understanding these three types helps you determine the best approach when filing a diminished value claim and negotiating with insurance companies.

State Laws on Diminished Value Claims

Diminished value claims arise when a vehicle’s market value decreases after an accident, even after repairs are made. Understanding the specific laws in your state is crucial for ensuring you receive fair compensation. This guide outlines how state laws address diminished value claims and what steps you can take to pursue them effectively.

State Laws on Diminished Value Claims

Only a few states, including Georgia, North Carolina, and Kansas, require insurers to cover first-party DV claims under a policyholder’s own insurance. In most states, insurers exclude diminished value from collision vs. comprehensive coverage, so you’ll need to file a third-party claim.

Each state also has a statute of limitations for filing a DV claim. The diminished value claim time limit typically ranges from two to six years from the accident date. Missing this deadline may result in a denied claim. Check your state’s insurance laws to confirm your rights and filing deadlines before pursuing a diminished value claim.

How to File a Diminished Value Claim

Filing a diminished value claim requires you to prove your car’s resale value dropped after an accident, even after repairs. Insurers are often reluctant to settle DV claims, by presenting strong evidence and following the necessary steps, you can boost your chances of receiving compensation.

Step #1: Check Your State Eligibility

First, confirm if you’re legally allowed to file a diminished value claim. Some states allow first-party claims through your own insurer, while most only recognize third-party claims against the at-fault driver’s insurer. Your ability to file depends on both your state laws and the terms of your policy, so it’s important to read the fine print or contact your provider for clarification.

Read More: Why does auto insurance vary from state to state?

Step #2: Gather Documentation

Gather all necessary documents to back your claim, including:

• A police report that outlines the details of the accident
• Repair invoices specifying the parts replaced and the scope of the damage

For more information, refer to our guide: Can I file an insurance claim without a police report?

Step #3: Obtain a Professional Appraisal

Ensure you hire a certified auto appraiser to evaluate your vehicle’s diminished value by comparing its condition before and after repairs to similar, accident-free vehicles.

Read More: How long does an accident stay on your record?

Step #4: Submit & Negotiate Your Claim

​When drafting a formal demand letter to your insurer for diminished value compensation, ensure you include:​

• Appraisal Report: A certified evaluation of your vehicle’s loss in value after the accident.
• Supporting Documentation: Police report and repair records confirming the damage and repairs.
• Specific Compensation Amount: The exact dollar amount you’re requesting, based on your appraisal and evidence.​

Upon submission, anticipate that the insurance company will review your claim and may respond with a lower offer or potentially deny the claim. If they decline to provide fair compensation, consider consulting with a legal professional who specializes in diminished value claims to assist in negotiations or to escalate the matter appropriately.​

Need help pushing back? Read our guide: How to Dispute an Auto Insurance Claim.

Before filing, know that not all vehicles qualify. Older cars, those with previous damage, or vehicles repaired with aftermarket parts may undergo closer scrutiny. Ensure the car’s age, condition before the accident, and the quality of repairs back up your case.

Get a professional diminished value appraisal to strengthen your claim with an unbiased assessment of your car’s post-accident value loss.

Read More: Where can I compare online auto insurance companies?

How Insurance Companies Handle Diminished Value Claims

How do insurance companies value totaled cars? Insurance companies often downplay or deny diminished value claims to minimize payouts. Adjusters may use flawed formulas (like 17c) to undervalue your claim.

Here’s an example of how diminished value is calculated using the 17c formula.

Diminished Value Claim Example With 17c Formula Calculation

Market-based appraisals often show higher losses, so hiring a diminished value expert can help you negotiate a better settlement by providing a more accurate and credible evaluation of your vehicle’s loss in value.

Read More: How to File an Auto Insurance Claim

Proving Diminished Value

When filing a diminished value claim, having solid evidence is essential, as insurance companies often dispute these claims. To increase your chances of securing fair compensation, gather and present detailed documentation such as accident and repair records, vehicle history reports, pre- and post-accident valuations, professional appraisals, and comparable sales data.

Insurance companies often try to minimize payouts, but with solid evidence, you can challenge undervalued offers and negotiate for a better settlement.

Understanding how diminished value works helps vehicle owners maximize their chances of receiving fair compensation. If you believe your insurer is acting unfairly, learn how to file a complaint against an auto insurance company.

Steps to Take If Your Diminished Value Claim is Denied

The amount you can recover from a diminished value claim is influenced by several factors, such as the severity of the accident, the quality of the repairs, your vehicle’s age and mileage, and any state laws or policy limits that may affect your ability to file a claim.

If your diminished value (DV) claim is denied, don’t accept the decision without challenging it. Insurers often reject claims to minimize payouts. Wondering how to dispute an auto insurance claim? You have options to fight back.

• Request a Written Explanation: Ask the insurer for a detailed reason for denial.
• Challenge the 17c Formula: Many insurers use this formula, but it often undervalues claims. Provide alternative calculations and strengthen your case with an independent appraisal or market value comparisons.
• File a Complaint with Your State’s Insurance Department: Some states require insurers to handle claims fairly.

If negotiations fail, consult a diminished value attorney to explore legal action or a small claims court case. Persistence is key — many denied claims are reversed or settled when properly challenged.

Maximizing your payout requires understanding the types of diminished value, state laws, and the claims process. Most states allow third-party DV claims, but only a few permit first-party claims, so check local regulations.

Filing a diminished value claim can help recover the financial loss your vehicle suffers after an accident, even if repairs restore its appearance. Insurance companies often minimize or deny these claims, using formulas like 17c to undervalue losses. If your claim is denied, you have the right to appeal, escalate the dispute, or seek legal assistance.

Before filing, confirm your eligibility and state-specific rules. Enter your ZIP code for more information on how to pursue a diminished value claim in your area.