The short answer
- It's the value your car loses after a crash. Even when repaired well, an accident history can lower resale value.
- It's usually claimed by the not-at-fault driver. Typically against the at-fault driver's insurer.
- You generally have to prove the loss. Often with an appraisal comparing before and after.
- Whether you can claim depends on your state. The rules vary, and some make it harder than others.
In this guide
Diminished value is one of the less obvious losses after a crash, and it is easy to overlook. The idea is simple: a car with an accident on its history is usually worth less than one without, even if the repair is flawless. This pairs with what to do when it wasn’t your fault.
A buyer will almost always pay less for a car that has been in a crash, however well it was fixed. That gap is the diminished value.
What is diminished value?
When your vehicle is repaired after an accident, it can be restored to working order and still be worth less on the market, because the accident now shows in its history. Diminished value is that difference: the gap between a vehicle’s pre-accident worth and its market value after repair. The Insurance Information Institute notes that buyers pay less for a previously damaged car even when the repair is to a high standard.
What are the main types of diminished value?
The terms below are commonly used by appraisers and in claims. Which of them an insurer or state recognizes varies.
| Type | What it means | When it comes up |
|---|---|---|
| Inherent | The loss in value from having an accident on record, even after a perfect repair | The type most commonly claimed |
| Repair-related | Extra loss when repairs are imperfect or incomplete | When the repair itself falls short |
| Immediate | The difference in value right after the crash, before repairs | More relevant to total-loss situations |
Who can claim diminished value?
It depends on who was at fault, and the Insurance Information Institute sets out the usual position:
| Situation | Usual position |
|---|---|
| The other driver was at fault | You can seek it from the at-fault driver’s liability coverage, since that driver must restore your car’s pre-accident value. The Institute says that in all states except Michigan, an at-fault driver’s payment includes diminished value |
| You were at fault | Standard collision cover generally excludes it, and your insurer usually pays repairs minus your deductible |
| The at-fault driver has no insurance | Your own uninsured motorist cover may respond, but only in some states (the Institute says about half) |
| Shared fault | Any payment may be reduced by your share of blame |
Newer vehicles with low mileage tend to have the strongest claims, because they had the most value to lose. Older cars may not lose value this way.
How is diminished value proved?
You generally have to show the loss rather than simply assert it. The Insurance Information Institute says the policyholder must prove that the repaired vehicle is worth less than before the accident, and does not give a formula. In practice that means:
- An independent appraisal that estimates the car’s value before and after the accident
- Repair records and the shop’s itemized invoice, with photos of the damage
- The vehicle’s history report and service records
- Comparable listings for similar cars with and without an accident history, where available
Keep all of it together. Our claim process guide shows where this fits in the wider claim.
When should I raise diminished value?
Before you sign anything that closes the vehicle claim. A release usually ends the claim, so ask for diminished value in writing while the property-damage claim is still open, attach your appraisal, and ask the insurer to explain any refusal. Time limits apply to property-damage claims and differ by state: see how long you have to file. The NAIC model regulation also says an insurer should not continue settlement negotiations with an unrepresented claimant where a statute of limitations could affect their rights unless it has given written notice of the limit, which is one more reason to check the date yourself.
Why do state rules matter for diminished value?
Whether and how you can pursue diminished value depends on your state: the rules, the time limits and the insurer’s obligations all vary, and so do court decisions. The Insurance Information Institute notes that outcomes depend on state law and court rulings, with Michigan as the stated exception for at-fault drivers’ payments. Treat this guide as the general picture, and check the specific position where you live through your state department of insurance or our state-by-state laws page.
What are the steps in a diminished value claim?
There is no single national process, but claims usually follow this order:
| Step | What to do | Why |
|---|---|---|
| 1 | Photograph the damage and keep the repair estimate and final invoice | Shows what was repaired and how severe it was |
| 2 | Finish the repair at a shop you trust, and keep the records | Repair-related loss is a separate issue from inherent loss |
| 3 | Get an independent appraisal of the car’s value before and after | The usual way to show the loss |
| 4 | Send the claim to the at-fault driver’s insurer in writing, with the appraisal | Creates a dated record |
| 5 | Ask for any refusal or offer to be explained in writing | Lets you see the reasons and respond |
| 6 | Do not sign a release until the claim is settled to your satisfaction | A release generally closes the claim |
Do I need a lawyer for a diminished value claim?
Often not, for a modest claim you can document yourself. Advice is more useful if the claim is large (on a newer car it can be significant), the insurer refuses without giving reasons, or an injury claim is open alongside it, because the property and injury claims can be settled separately or together. Our honest guide sets out both sides.
- Diminished value is the value lost because of an accident history.
- It is usually claimed by the not-at-fault driver against the other insurer.
- Standard collision cover generally excludes it when you are at fault.
- You generally need an appraisal and records to prove the loss.
- Raise it in writing before you sign anything that closes the claim; state rules vary.
Common questions
What is a diminished value claim?
It is a claim for the value your vehicle loses because it now has an accident on its history, even after a quality repair. It is the gap between its pre-accident value and its market value after repair.
Who can claim diminished value?
Most commonly the not-at-fault driver, claiming against the at-fault driver's insurer. The Insurance Information Institute says a standard policy generally excludes it when you are at fault.
Can I claim it from my own insurer?
Usually only in limited cases. If the other driver is at fault and uninsured, your own uninsured motorist cover may respond in some states. The Insurance Information Institute says about half of states allow this.
How do I prove diminished value?
You generally have to show that the repaired car is worth less than before the accident. An independent appraisal of before and after value, repair records and the vehicle history are the usual evidence.
Is diminished value the same as a total loss payout?
No. A total loss pays the car's value because it will not be repaired. Diminished value applies when the car is repaired and still worth less. See our guide on a totaled car for the total-loss process.
Does my share of fault change the amount?
It can. The Insurance Information Institute notes that a payment may be reduced by the policyholder's share of blame, depending on state law.
Do older cars have diminished value?
The Insurance Information Institute notes that older vehicles may not lose value this way, because replaced parts can sometimes raise their worth. Newer, low-mileage cars tend to have the strongest claims.
Is there a deadline for a diminished value claim?
Time limits apply to claims for property damage, and they differ by state. Raise it before you settle the repair claim, and check the limit in our statute of limitations guide.
Does a repair that went wrong count as diminished value?
Poor or incomplete repairs are a separate problem from the lasting loss in value from an accident history. Document the faults, get a second shop's opinion, and raise both with the insurer.
Will the insurer volunteer a diminished value payment?
Often not. Insurers do not always raise it, so if the other driver was at fault it is worth asking for it explicitly and putting the request in writing.
Sources
Written by The Accident Advisory editorial team from the sources below.
The Accident Advisory provides free, general information and is not a law firm and does not provide legal advice. This guide is for informational purposes only and is not a substitute for advice from a qualified attorney about your situation. Claims processes, valuation and deadlines differ by state and by case, and change over time.