Diminished Value Claim Calculator: How It Works

If you recently had a car accident and feel that the damage diminished the value of your car, you’ve come to the right place. Diminished value claims can be complex, though you can receive the fairest compensation for your troubles by using the right tools.

At diminifax, we provide accurate diminished value reports so that you can receive a good payout for your auto insurance claim. We aim to provide convenient calculations to help you get what you deserve.

Below, one of our diminished value calculation experts discusses what you need to know before filing a claim.

What Does Diminished Value Mean and When Does It Happen?

When you have a car accident, sometimes major damage may reduce your car’s overall market value. Even after you repair the vehicle to restore it to perfect condition, its sales value still might be less than the original purchase cost. Insurance companies refer to this scenario as immediate diminished value.

Before purchasing a vehicle, most people check the vehicle history report, which displays any accidents. Occasionally, this report may damage your car’s selling price. Inherent diminished value is the name for this scenario.

Either way, you may deserve a payout for the adjusted value when you’re not at fault since the other driver caused the accident. Diminished value claims typically happen when an auto accident causes severe structural damage or moderate damage to a vehicle, making the car’s resale value worth significantly less than it was before the accident.

What Is the Purpose of Filing a Diminished Value Claim?

Filing a diminished value claim with a car insurance company allows you to receive financial compensation for your losses as a car owner. When the value of your car goes down so low that you cannot return it with repairs, insurance companies often must cover the gap in your vehicle value.

Remember that “gap insurance” is a separate issue from diminished value claims when dealing with car insurance companies. If you total your car and still owe more money on your loan than the car’s current worth, your insurance company will help you pay the difference if you have purchased a supplemental policy called gap insurance above and beyond your standard policy.

Who Can File Diminished Value Claims With an Insurance Company?

Most insurance companies make it difficult to file a claim for your car’s diminished value. Usually, after a car accident, the at-fault driver’s insurance company must restore your original vehicle’s function by repairing it to work again or offering a payout value if the crash totaled the car. Sometimes, however, repairing or paying you for your damage will not cover all of your losses if your vehicle’s fair market value decreases.

To successfully gain additional compensation for the car’s diminished value, you must fall within certain eligibility requirements, including:

• You must own the vehicle, not lease it.
• Your car must be under seven years old.
• Your vehicle must have under 100,000 miles on it.
• The car cannot have any previous wrecks, and if it does, they must be minor.
• You cannot be the at-fault driver.
• You must prove the diminished value with a reputable calculation.

If you fall within all of these categories, you may have a great chance of recovering the diminished value of your vehicle. If the at-fault driver did not have car insurance, you might have even better odds, especially if you have uninsured driver coverage with your car insurance company.

Why You Should Calculate Your Diminished Value After an Accident

Calculating diminished value after car accidents gives you a better shot at obtaining more fair compensation amounts. Understanding your estimated diminished value can help you determine if and how you should progress through the claims process.

Often with major damage after a car accident, drivers do not even realize the diminished value and so they lose money from the ordeal.

How Does the Diminished Value Calculator Work?

The diminished value formula works by factoring in information about your car’s mileage, bass loss of value, state laws, damage severity, age, and pre-accident value to determine your car’s total diminished value.

The equation can be relatively complex to complete, so we recommend utilizing a third-party provider like diminifax to help you determine your diminished value with accuracy.

Below, we will cover each aspect of the diminished value formula so you can better understand whether or not the damage from a car accident will qualify you.

Adhere to State Laws

First, you must determine whether or not car insurance companies in your state allow for diminished value claims and how long you have to file one.

Certain states also require additional structure surrounding the formula, though we will discuss the base calculations in this article.

Determine Your Pre-Accident Market Value

To calculate diminished value, you must first understand what your car was worth before the car accident.

You can find the value of your car by using an online calculator like Kelley Blue Book, NADAguides, or Edmunds. Simply enter in information about the make, model, year, features, and pre-accident condition and these calculators will analyze the current market pricing to determine the value of your car.

Factor in the Base Loss of Value

Most car insurance companies utilize a depreciation cap, meaning that they expect your car’s value to depreciate by no more than a certain amount after an accident. The average base loss of value is 10%.

To find your vehicle’s estimated base loss of value, divide your car’s pre-accident value by 10.

Typically, any minor damage, moderate damage, or structural damage will not decrease your car’s sale price by more than 10%, which is why this is the starting number. From here, we will add on more calculations to determine if 10% is too high for your diminished value claim.

Apply the Damage Multiplier

Next, you will use the number you found above and multiply it by a decimal from zero to one to determine whether or not the damage your car suffered will depreciate the car’s value by that total 10% cap. Depending on the damage severity, your depreciation value will decrease or stay the same.

You can use the following key to determine how much you should multiple your number:

• 1.00 for severe structural damage: The accident demolished the vehicle’s windshield pillars or frame, typically from the car flipping.
• 0.75 for major panel and structural damage: The car’s axles and frame bent or broke during the crash.
• 0.50 for moderate panel and structural damage: The vehicle has massive dents in the body and the airbags deployed, though the frame is in decent condition.
• 0.25 for minor damage to panels and structure: The car’s fender or hood has dents, though everything else runs properly.
• 0.00 for no damage to the vehicle’s structure or panels: The car suffered cosmetic damage like paint scratches, broken windows, or minor dents.

You can choose any fair decimal within this range to display your vehicle’s damage. You do not need to select these exact numbers. For example, you may decide that the damage severity is between these ranges, like 0.79.

With one being the most severe damage multiplier, your depreciation value will remain at 10% because anything multiplied by one remains unchanged.

You must select zero if you have minor damage, which will bring your diminished value to zero, meaning that you do not have a claim.

Determining Damage Severity

Remember that damage is not an exact measurement, and you cannot determine your damage multiplier based on the cost of repairs. For example, scratched paint can cost thousands of dollars, though it does not constitute any number above a zero on the scale above. An insurance adjuster can conduct a physical inspection to help determine the damage severity.

Apply the Mileage Multiplier

Now, you will need to multiple again, though you must factor in the vehicle’s mileage this time. Similarly, the mileage multiplier utilizes a scale of zero to one to help you determine the diminished value. Cars with fewer miles will lose more worth in a car accident than those with higher miles.

Use the following key to determine what you should multiply by:

• 1.0 for vehicles with 0 to 19,999 miles
• 0.8 for vehicles with 20,000 to 39,999 miles
• 0.6 for vehicles with 40,000 to 59,999 miles
• 0.4 for vehicles with 60,000 to 79,999 miles
• 0.2 for vehicles with 80,000 to 99.999 miles
• 0.0 for vehicles with 100,000 miles or more

Calculate the Total Diminished Value

Finally, use all of the calculations from above to arrive at your diminished value. Essentially, you must:

1. Determine the vehicle’s pre-accident value.
2. Divide that number by 10.
3. Multiply that number by a value between zero and one based on the damage.
4. Multiply again by a value between zero and one based on the vehicle’s mileage.
5. The resulting number is your diminished value.

Calculation Example

For example, suppose your car was worth $50,000 before the accident and had 15,000 miles. The accident caused major damage to the vehicle’s structure and panels. For this example, we would:

• Divide 50,000 by ten which equals 5,000.
• Multiply 5,000 by 0.8 for your damage which equals 4,000.
• Multiply 4,000 by 1.0 for your mileage which equals 4,000.

In this scenario, your car’s diminished value is $4,000, which is 8% of the car’s total pre-accident value. Now, your vehicle is worth $46,000, which may allow you to recover diminished value for your loss.

How Much Can You Recover With a Diminished Value Claim?

Calculating diminished value involves a lot of factors, so no standard payout rates exist. The amount of money you receive depends on the structural damage from the car accident, the pre-crash value of your car, the at-fault party, your vehicle’s mileage and age, and your state laws.

As a typical rule of thumb, an insurance agency awards around 10% to 25% of the fair market value for a driver’s vehicle on average. The newer your car is, the more money you may receive with property claims. Brand new vehicles with few miles lose much more value than older models.

What to Do After You Calculate Diminished Value

After calculating your car’s diminished value, you have a few options:

• File a diminished value claim with an insurance company. You can write a demand letter stating your request or call the company to speak with someone about your options. Be sure to use a diminished value calculator before making a value claim.
• Opt for total loss cash over repairs. If the insurance company wants to repair your car, but the repairs will not return the full value, you can attempt to claim a total loss to receive a payout for your car’s original value. Keep in mind that you must have severe damage for this option to work.
• Get your money’s worth from the car. If you do repair the vehicle without receiving a diminished value payment, drive the vehicle for as long as possible instead of selling it so that you can utilize every cent of its worth.
• Don’t repurchase your totaled car. After totaling a car, you could purchase the salvage title, though this title would decrease your car’s value even more. We recommend avoiding this purchase and opting for a different vehicle instead.

Receive the Maximum Amount for Your Claim with Diminifax’s Diminished Value Calculator

If you recently had a car accident and felt that the damage decreased your vehicle’s value, you may qualify for a diminished value claim. By utilizing our diminished value calculator, you can find a proven numerical amount that can strengthen your claim. And we can help!

Accidents happen all of the time, but you shouldn’t have to suffer monetary losses because of someone else’s mistake. At Diminifax, we want to help you receive the money you deserve. We will analyze your case, determine your diminished value, and help walk you through the claim process so that insurance companies do not take advantage of you.

If you need support for your diminished value claim, fill out our Diminished Value worksheet, and we’ll go to work for you!