What Is Diminished Value?


Diminished value is simply the loss in value a vehicle incurs after an accident (when you were not at fault). All things being equal, vehicles involved in accidents are worth less than like vehicles involved in no accidents.

The most common forms of diminished value are the loss in value because your vehicle has been in an accident and the loss in value after a vehicle has been repaired using cheaper replacement parts.

Example 1: Bill’s car is worth $20,000. Bill is involved in an accident that is not his fault. Bill’s vehicle requires $5,000 worth of repairs. After repair, because Bill’s vehicle was involved in an accident (and his Carfax report shows this), Bill’s vehicle is now valued at $19,000. Bill’s diminished value claim is for $1,000.

Example 2: Bill’s car is worth $20,000. Bill is involved in an accident that is not his fault. Bill’s vehicle requires $5,000 worth of repairs. After repair, because Bill’s insurance company authorized the use of cheap replacement parts (non OEM), Bill’s vehicle is now valued at $19,500. Bill’s diminished value claim is for $500.

If You Were At Fault

If you were at fault for your accident, you cannot make a diminished value claim.

If You Were Not At Fault

1st Party Claim - this is against your own insurance company (underinsured motorist claim or uninsured motorist claim). The courts handle 1st party claims as contract actions and not negligence actions.

3rd Party Claim - this is against another driver's insurance company. The courts handle 3rd party claims as negligence actions.

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