How to Use a Diminished Value Calculator

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Written by Serise Lange Edited by Quiana Darden Reviewed by Amanda Clear

Updated March 22nd, 2024

When you get into an accident, it’s natural to have a wide range of questions like, what’s next? But here’s one question you might not think to ask – how much does my car’s value diminish after an accident?

This is important information to know because even if your car is repaired, it won’t hold the same value as it did before being damaged. 

So, what happens when you’re in an accident that isn’t your fault? Do you just have to deal with the diminished value of your car? You can’t turn back time, but you can file a diminished value claim. You’ll want to use a diminished value calculator to determine how much your vehicle’s value has been impacted. 

What is Diminished Value?

According to the Insurance Information Institute, diminished value (sometimes referred to as DV) is the difference between the car’s value before the accident and the market value after the repairs are done. 

While all vehicles experience diminished value after an accident, not every driver will qualify to receive money from a DV claim. One type of accident where compensation is common is when the other driver is at fault. In every state except Michigan, you could be eligible for compensation from a diminished value claim if the other driver causes the accident.

So, let’s say you’re rear-ended by another vehicle. In this case, the other party is following too close, not paying attention, or losing control of their braking abilities. No matter the reason, the accident isn’t your fault. 

Before filing a diminished value claim, you need to know how much your vehicle’s value has been reduced. That’s when you want to calculate diminished value manually or by using a diminished value calculator. 

How to Calculate the Diminished Value of Your Car?

Determine Your Vehicle’s Value

The first step in determining the diminished value of a vehicle involves researching the current value of the car. You can typically look up the market value based on an established source such as the Kelley Blue Book (KBB) or the National Automobile Dealers Association (NADA). 

Both resources have calculators to help you determine a reliable vehicle estimate. 

However, keep in mind your insurance company sets limits on how much the vehicle is worth from their perspective, even if you may be able to sell the car at a higher cost privately. This is called the base loss of value, representing the maximum amount the insurance company will pay on the DV claim. 

Use the 17c Diminished Value Formula

The most common way insurance companies calculate diminished value after a car accident is using the 17c diminished value formula. The name comes from a famous 2001 case in Georgia that went to the Georgia Supreme Court. 

It essentially declared that although State Farm, the insurance company responsible for taking care of the policyholder’s physical damages, handled the repairs, the company failed to address the vehicle’s diminished value after the accident. Simply put, structural damage changes the car’s value even if it’s been repaired by a reputable repair shop. 

So the 17c formula involves looking at the vehicle’s value and applying a damage multiplier to account for the real structural damage to the vehicle. This multiplier ranges from 0 to 1, where 1 represents severe damage to the vehicle’s structural integrity, and 0 is no structural damage. Here are the other damage multipliers to be aware of: 

• 0 represents no structural damage
• 0.25 represents minor damage to the structure and panels of the vehicle
• 0.50 represents moderate damage to the structure of the panels of the vehicle
• 0.75 represents significant damage to the structure and panels
• 1 represents severe structural damage

Putting Together the Diminished Value Formula 

Let’s look at the 17c formula in a real-world example. Using the same rear-end accident mentioned previously, let’s assume the vehicle’s market value was $30,000, with moderate damage to the structure of the car.

Step 1: Start with the vehicle’s market value and multiply it against the 10% base value of the loss cap. 

$30,000 x 0.10 = $3,000, which represents the maximum amount of the claim.

Step 2: From there, you’ll take this maximum amount and multiply it against the damage multiplier. 

$3000 x 0.50 = $1,500

Step 3: To complete the formula, we must adjust it based on the vehicle’s mileage. Mileage already decreases the car’s value, so it has to be applied before fully realizing the diminished value of your vehicle. 

To do this, we apply a mileage multiplier that represents vehicle mileage at the time of the accident: 

If the car in our example has 65,000 miles, we use a mileage multiplier of 0.40 to get the final diminished value of the vehicle:

$1,500 x 0.40 = $600. 

Result: In this case, you’d get $600 from your claim to account for the diminished value of your vehicle. 

While state laws vary, it is crucial to understand it’s your responsibility to pursue the diminished value claim and provide proof that your vehicle holds less value compared to its original condition. 

How to File a Diminished Value Claim 

 Now that you understand how to calculate the diminished value of your vehicle, it’s time to go through the claims process step by step. In the insurance world, everything is about providing proper documentation to supplement your claim. 

Here’s how to manage your diminished value claim the right way: 

1. Document the car’s value on your own. Going to the Kelley Blue Book is an excellent place to start. Be sure to print out or screenshot your results for proof. Simply providing the number you get might not be enough. 
2. Have the vehicle appraised by a professional. A certified appraiser will conduct their research and determine your car’s value. 
3. File the diminished value claim with the insurance company. Each insurance company might have different rules when it comes to filing a claim, so contact them to learn what you need to provide. 
4. Wait for a decision. Now, you’ve done your part. It’s time to wait for a decision from your insurer after they review your documentation.

It’s common to get anxious during this process, but the best mindset is to set it and forget it. That’s because it’s not guaranteed that you’ll receive money from your claim. For example, if your vehicle already had significant damage before the accident, there’s a lower chance that you’ll have a successful diminished value claim. 

That’s why these are more commonly seen with newer vehicles than older ones. 

Other Times to File a DV Claim 

What if you are involved in an accident with an uninsured driver? If you already have uninsured motorist property damage coverage with your insurance company, you’ll need to file a diminished value claim with them to get any money from the loss of value. 

The other aspect to consider is even if you have uninsured motorist coverage, you must allow your insurance company to conduct a proper coverage investigation. Doing so will ensure the other driver doesn’t have insurance coverage, nor are they entitled to someone else’s coverage. 

This is often the case with family members that relatives or spouses cover. Even though they may not be specifically named on an insurance policy, it’s possible someone else’s coverage does indeed protect them in this specific accident. If coverage is available, you will switch from uninsured motorist coverage to directly filing a claim against their insurance policy. 

Going Beyond the Cost of Repairs

Ultimately, understanding diminished value means working on getting all you are owed after a crash. It’s a stressful time, and you must consider multiple factors along the way. However, the more you look into whether there’s a case for DV, the more likely it is that you could get more money not just to repair your vehicle but also to help move on from the accident.

As mentioned before, the burden of proof is on the driver seeking the claim, which means you’ll go to the insurer of the at-fault party for recovery of diminished value. As long as you follow the steps in this guide, you’ll be well on your way to at least providing a solid case for your claim. 

FAQs About Diminished Value Calculators and Claims

How do I calculate the diminished value of my car?

You can determine the diminished value of your vehicle using an online diminished value calculator or using the 17c formula outlined above.

How much does a car lose in value after an accident?

This depends entirely on the severity of the damages caused due to the accident. Calculating your vehicle’s diminished value will help you determine how much value is lost. 

How do you negotiate a diminished value claim?

You can start the process by requesting the difference between your vehicle’s diminished value and how much it’s worth compared to similar vehicles that haven’t been damaged. Explain that the diminished value isn’t your fault and you should receive compensation. You should follow up after beginning the negotiation process if you don’t hear back.

Serise Lange Auto Insurance Writer

Serise Lange is a freelance writer focused on insurance, finance, crypto, and helping people make sense of the intersection between money, progress, and power. When she isn't using her time as an auto insurance claims adjuster to educate the public, she's exploring the best of the American Midwest and beyond.