Filing a Diminished Value Claim for Lost Vehicle Value After an Accident

The costs associated with a motor vehicle accident can be high, from car repair bills to medical expenses. Luckily, insurance is there to cover these losses. But what about the loss in market value that your car will experience due to its involvement in an accident? As vehicle history reports become more available to car buyers–and potential car buyers shy away from purchasing a car that’s been in an accident, even if it’s been repaired to like-new condition–you may find that your car is worth thousands of dollars less than it was before your accident.

In Florida, drivers who face such a reduction in their car’s value following an accident have the opportunity to file a diminished value claim. Understanding how diminished value claims work and the guidelines for filing one can help you recover the maximum amount possible to make up for your car’s lost value.

What is a diminished value claim?

Simply put, Florida law allows car owners to recover the difference in value between their car’s pre-crash value and its post-repair value by filing a diminished value claim. This process recognizes that vehicles that have been in an accident have inherently lower market values than the same vehicle that has not been in an accident, and diminished value claims are intended to allow drivers to recover this inherent value loss.

What do I need to show when filing a diminished value claim?

In order to successfully file a diminished value claim, you will need to demonstrate two things: the value of your car prior to the accident and the reduced value to your car following repairs. Getting your car appraised by an experienced appraiser can establish this loss of value. Appraisers use various metrics to place a value on a car after an accident, including analyzing the local automobile market, inspecting the car’s collision damage, and using industry knowledge of how an accident history affects deprecation. A letter from a local car dealer with their trade-in value can also help, particularly if the dealer explicitly states that the lower value is due to your car’s accident history.

If your car was unable to be repaired to its pre-accident condition, evidence of this can also help your claim. Pictures that show aesthetic differences such as mismatched paint or gaps can be submitted with your claim, as can work orders showing that non-factory parts were used in the repairs.

Can I file a diminished value claim if I’m found to be at fault for the underlying car accident?

No. Florida law permits drivers to receive compensation for the reduction in their car’s value following an accident from the at-fault driver’s insurance policy. If you were the party responsible for the car accident that caused damage to your vehicle, you will be unable to submit a diminished value claim.

Can I file a diminished value claim if the at-fault driver did not have motor vehicle insurance coverage?

Unfortunately, if the damage to your vehicle was caused by an uninsured driver, you will be unable to file a diminished value claim. This is true even if you have uninsured motorist coverage; in Florida, such policies only cover your cost of repairs and your medical bills.

What is the statute of limitations to file a diminished value claim in Florida?

Florida drivers must file a diminished value claim with the at-fault driver’s insurance company within four years of the date of the car accident.

Can I file a diminished value claim if my car has been in a prior accident?

Yes, you are permitted to file a diminished value claim even if your car had already been in an accident. However, you’ll be required to demonstrate the loss in value that your car experienced from the accident in question, and the already-reduced market value of your car will be used as a benchmark.

How is diminished value calculated?

Diminished value can be calculated in a number of different ways. However, the majority of insurance companies in Florida use four steps in what is known as the “17c formula.”

  1. Under the 17c standard, the insurance company will first determine your car’s pre-accident market value using either Kelley Blue Book or NADA.
  2. A cap of 10 percent is then applied to that market value to determine your maximum recovery from a diminished value claim. In other words, if your car was worth $10,000 according to Kelley Blue Book or NADA, the maximum claim amount is $1,000.
  3. The insurance company will take the maximum claim amount and apply a multiplier based on the structural damage that your car received from the accident; this multiplier ranges from 1 for severe structural damage to 0 for no structural damage. For example, if your car sustained moderate structural damage, the insurance company would take the maximum claim amount and multiply it by 0.5 (resulting in $500 in this case).
  4. The insurance company will apply a multiplier to account for the mileage on your car, ranging from 1 for less than 20,000 miles to 0 for over 100,000 miles. Assuming your car had 50,000 miles at the time of the accident, the insurance company would multiply the claim amount adjusted for structural damage ($500) by 0.6 to reach the final diminished value for your car of $300.

It is important to note that this is not the only way to calculate diminished value. Many legal experts, for example, recommend calculating diminished value by multiplying the pre-accident market value by 0.33. Insurance companies tend to prefer the 17c formula as it often minimize the diminished value, but you can–and often should–dispute this calculation during the claims process.

What if I’m upside down on my car note because of damage from an accident?

It isn’t unusual for the post-accident market value of a car to drop below the outstanding balance of the car’s loan, particularly if the car was new and only recently purchased. Unfortunately, a diminished value claim does not affect how much you owe on your car note. Such claims act as one-time payments to compensate the car’s owner for the loss in value. However, as noted above, what the insurance company pays you for your diminished value claim may not match the actual loss in value that you incurred. If the outstanding balance on your car loan exceeds your car’s post-accident value plus your diminished value claim recovery, you will still need to continue to pay off your car note.

Can an insurance company consider my car totaled if the diminished value is less than my car is worth?

A car is deemed to be “totaled” if the cost of the necessary repairs following an accident exceeds the actual value of the car; indeed, the term “totaled” is short for the insurance industry term “total loss.” If your car has been deemed to be totaled, you won’t typically go through the diminished value claim process. A diminished value claim is meant to compensate for loss in market value in cases where the car still has enough value to make repairs justified; a car that has been totaled won’t even go through the repair process.

In other words, if the insurance company has declared your car to be totaled, you should seek compensation by filing a total loss claim rather than a diminished value claim.

Is it necessary to hire an attorney to file a diminished value claim?

You can file a diminished value claim with the at-fault driver’s insurance company on your own without legal representation. However, you should be aware that insurance companies typically fight diminished value claims, either by denying that any diminished value has occurred or by underestimating the loss in market value that your car has experienced. A knowledgeable car accident attorney who is experienced with the diminished value claim process can maximize your recovery by helping you get a trustworthy estimate of your car’s value, drafting demand letters to the insurance company, and representing you if your case goes to court.