You ask the at-fault driver's insurer, through a diminished value claim, to pay for the drop in resale value your car suffered in the crash. You have to begin this request yourself, and it is not part of the repair bill.
How Diminished Value Claims Work
These claims are filed as third-party claims in most cases. You are asking the other driver's insurer to pay from the liability coverage on their policy. The Insurance Information Institute states a driver hit by another person should be paid for this loss in every state but Michigan.
A claim you make on your own policy is called a first-party claim. Those work only on rare occasions. Research published in the NAIC Journal of Insurance Regulation identified Georgia as the only state with a clear rule that favors drivers.
The insurer will not include this amount with the repair check on its own. Kelley Blue Book notes that you have to request it through a separate step, and settling it often takes more time.
The Diminished Value Claim Process, Step by Step
- Confirm who was at fault and what your state allows. File the request with the insurance company of the at-fault driver. Our rules by state table shows what each state allows and your deadline; look yours up there.
- Complete the repair work first. Hold on to the estimate, the final bill and a record of the parts that were replaced. The loss is based on the car after it has been repaired.
- Figure out the dollar amount of the loss. You can use our calculator to see the 17c figure an insurer is likely to use, plus a market range. If your loss is large, consider an independent appraisal.
- Phone the other driver's insurer. Find out from the adjuster how the company handles these requests. Every insurer uses its own steps and its own forms.
- Send your demand in writing. Name the dollar amount you want, include your evidence, and save a copy. Our demand letter is built from the answers you give.
- After you negotiate, make your choice. If the amount they offer is low, write back and present your evidence. When talks reach a standstill, small claims court or a lawyer can be your next move.
What to Collect Before You Request Payment
You carry the burden of proof. According to Washington's insurance regulator, this loss is not paid by the insurer on its own. You need to prove the market value dropped, even with the repair completed. Carfax says repair receipts, police reports and photos are useful.
- The claim number from the other driver, plus the police report
- Pictures of the damage taken before the repair work
- Both the repair estimate and the shop's final invoice
- The pre-crash value of the car from a pricing guide
- A vehicle history report that lists the accident
- The report from any appraisal you paid for
The Time It Takes
Plan on weeks, not days. The whole process can take several weeks, or even months, according to Carfax. A standard repair claim gets settled faster. You can reasonably ask for written updates while you are waiting.
There is also a final cutoff date. The statute of limitations is your deadline for a lawsuit, and it varies from state to state. You have 2 years in Texas and 4 years in Georgia for property damage, based on the Nolo chart. That clock is not paused by talks with an adjuster, so mark the date early.
What Is the Average Diminished Value Settlement?
No dependable nationwide figure for an average diminished value settlement has turned up in our research. Instead, the NAIC paper offers a rule of thumb taken from real claims. You can expect the loss to settle near 10% to 20% of your repair cost; with a $10,000 repair that points to roughly $1,000 to $2,000.
What they offer at first can be a great deal less. After $6,000 in damage, a driver received a check for $48.76 in a matter heard by a federal appeals court. An editor at Kelley Blue Book ran the 17c formula on her own vehicle and came up with $650 to $715. The offer she got from Liberty Mutual was $400.
Leased Cars, Totaled Cars and Crashes You Caused
Leased car: the leasing company holds the title, so Kelley Blue Book treats it as the one who suffered the loss. Contact the leasing company and allow it to manage the claim.
Total loss: the Washington regulator says a total-loss payout is set at the car's actual cash value. You cannot claim a resale loss because no repaired car exists.
You were at fault: a standard collision policy does not cover this loss when you were the one who caused the crash. Only a handful of states break from that rule, per the Insurance Information Institute.
Claims at the Large Insurers
Every major insurer runs its own process for these claims. Look over what we learned about your insurer ahead of the call.