Court history on State Farm diminished value questions is deeper than for any other insurer. A lawsuit against State Farm is what made this kind of loss widely known. State Farm usually covers the lost value through that driver's policy when your state allows it and a State Farm driver hit you. For a State Farm policyholder, the answer is most often no, except for residents of Georgia.
After a Crash Caused by a State Farm Driver
You file this as a third-party claim, which means you are asking the other person's insurer to pay. The person who caused the crash owes you for the damage your car suffered. In most states the harm includes the drop in value, even after a proper repair. A research report for the Connecticut General Assembly noted that most courts accept these kinds of claims. You still need to supply proof of the loss, the report adds.
The property damage liability portion of the driver’s State Farm policy provides the payment. That coverage pays for harm the driver causes to another person's belongings. Rules still vary by state, so first check yours on our table of state rules.
The State Farm v. Mabry ruling and the start of 17c
The State Farm v. Mabry case was decided by the Supreme Court of Georgia in 2001. The court found that a car can lose worth from damage even after repairs restore how it looks and drives. According to the court, State Farm was required to weigh that loss together with the physical damage. The Matthiesen, Wickert and Lehrer law firm surveyed all 50 states. It found that $150 million was what State Farm was ordered to pay for settlement costs and fees.
The 17c formula was State Farm's own method, built later. J.D. Power notes the name is taken from paragraph 17, section C, where it first showed up. In the case of Tiller v. State Farm, a federal appeals court later checked real 17c payments. The amount for one driver was $48.76. The drivers claimed the formula was designed to produce low results. Whether the formula is fair was not decided by the court.
Will State Farm pay someone who bought its insurance?
Usually not. When you file on your own policy, it is a first-party claim. In State Farm's Ohio auto policy booklet, a covered loss leaves out any drop in a covered vehicle's value after repairs. The booklets vary by state. Get your own booklet from your agent and look at the part that says what a loss is.
Georgia stands as the major exception. Under Mabry, State Farm has to consider lost value if a customer in Georgia claims for damage to the car. That decision also explains why Georgia is where the 17c method began and then spread to other places.
Items to Send to State Farm
Write out your request and include the claim number on every sheet. Keep the originals; send copies: A solid file contains these pieces:
- your final repair bill showing the parts and labor
- pictures of the damage from before the repair
- a history report for the vehicle that includes the crash
- a market estimate or appraisal to support the number you are asking for
A State Farm diminished value claim depends on that evidence. Our free estimate places the insurer’s formula number beside a market range. After that, the fill-in demand letter turns your figures into a brief letter to print and send.
How to Challenge a Low Offer from State Farm
Request a written explanation of the offer from the adjuster. Ask which damage numbers and which mileage numbers went into it, if the offer came from 17c. For a vehicle with over 100,000 miles, the Tiller case showed State Farm used a mileage modifier set at 0%. So the formula can give a car with high miles nearly no payment.
According to Georgia's state insurance office, placing full trust in one formula may be wrong. You can cite that language from the 2008 Georgia directive. No matter the state, your strongest response is a written appraisal from someone who knows the local market. You can complain to your state insurance department if the claim gets stuck. What happens next is explained in our claim steps.
State Farm Diminished Value Questions
Will State Farm pay when one of its drivers hits me?
In most cases yes, when your state permits the claim and you can demonstrate the loss. You make your claim against the driver, whose coverage with State Farm provides the payment.
Does State Farm Pay Diminished Value to Its Own Customers?
The Ohio booklet we checked does not cover it; it pays nothing for a drop in value after a repair. Customers in Georgia are the exception because of the Mabry decision.
How Do I Begin a Claim with State Farm?
Let the adjuster on your open claim know you are also asking for the lost value. Then send off your letter and proof, and hold on to a copy of every item.