What Is a Diminished Value Claim?

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An illustration of a car next to an air compressor, a tool box, and an engine pulley (presumably in a mechanic's bay), representing three types of diminished value: immediate diminished value, inherent diminished value, and repair-related diminished value

The Balance / Melissa Ling


A diminished value claim is an insurance claim to recoup money for the anticipated loss of resale value after a car has been in an accident—even if the car has been repaired. Because the accident is in the car's history report, future buyers will perceive its value as lower.

Key Takeaways

  • There are three types of diminished value but the one most used in claims is “inherent diminished value,” also known as “stigma damage.”
  • An inherent diminished value claim may compensate the insured for a car worth less after an accident and repairs.
  • Diminished value claims are more likely to succeed if you weren’t at fault for the accident.
  • You may be required to prove a diminished value claim through expert estimates or assessments, or by trying to sell the car.
  • Not all states or insurers will pay out a diminished value claim.

Types of Diminished Value

There are three ways a car may sustain diminished value following a car accident.

Immediate Diminished Value

This is the difference in the value of the car immediately before and after the accident. It’s the value before any repairs have been made. This type of diminished value is rarely used in claims because insurance companies usually provide repairs right after an accident.

Inherent Diminished Value

Also known as “residual diminished value” or “stigma damage,” this is the most common form of diminished value in claims. It assumes the car has been repaired back to its original condition, but because the car’s history now shows that it’s been in an accident, buyers will assign it a lower value. This means that you'd get less for the car if you tried to sell it or trade it in.

Repair-Related Diminished Value

This is the lost value that results from poor-quality repairs. Let's say that the paint color is not a perfect match, or aftermarket parts were used in the repairs. In these cases, the repair lowered the value beyond the fact of the accident alone.


It’s possible, but rare, to claim diminished value before repairs are even made or if shoddy repairs led to reduced car value. Talk to your claims adjuster for more information.

How a Diminished Value Claim Works

A claim for inherent diminished value asks for compensation if a car is repaired after an accident but still suffers an actual or perceived loss of value compared to its pre-accident value.

  • Alternate name: Diminution in value

Even if you don’t tell a potential buyer about the damage to your vehicle, they’ll likely still find out when they run a CARFAX report on the car, as is often advised. The report reveals everything about an accident, such as:

  • Accident history
  • Structural damage
  • Severe to serious damages
  • Damage location(s) and repairs

The buyer may worry that the repairs weren’t high quality or didn’t or couldn’t address unseen problems.

State law and your policy determine how a diminished value claim works. In general, if you weren’t at fault in an accident and the other driver has insurance, you file your diminished value claim with the at-fault party’s insurer.

If you were at fault in an accident, your insurer might not be required to pay for your diminished value—but as mentioned, much is up to your policy and state case law. For example, in Missouri, if you badly damage your car by sideswiping a guardrail, your insurer isn’t required to pay for the difference between the pre-accident and post-accident value.

If the other driver is at fault, you may be able to recover diminished value if you are able to prove your case. For example, in Missouri, if you badly damage your car by sideswiping a guardrail, your insurer isn’t required to pay for the difference between the pre-accident and post-accident value. But if another vehicle sideswiped yours and caused the same damage, the at-fault car’s insurer will likely be required to help make up the difference in value.

Example of a Diminished Value Claim

Another driver hits your car, currently valued at $25,000. The at-fault driver’s insurance pays the $3,000 repair bill. However, you discover the car is now only worth $21,000 due to the accident, even if it looks restored. The diminished value claim could help you recoup some of those losses, even if you weren’t planning on selling the car soon.

You could file a diminished value claim with the at-fault driver’s insurance. However, you must generally prove that your car has lost value. Depending on your state, you may be able to do this through a couple of approaches:

  • Getting an auto dealership sales manager’s written estimate of the price that would be offered for the vehicle if it hadn’t been in an accident versus the price post-accident and repairs
  • Hiring an independent appraiser who specializes in diminished value to write an appraisal of the diminished value amount

While you can provide evidence and estimates of the change in value, the insurer has the final word on what that value payout will be. Diminished value claims can be denied for many reasons:

  • Your state is one that doesn’t have legislation or case law requiring car insurers to pay a diminished value claim.
  • You’re at fault for the accident.
  • You’re missing the required documentation.
  • The value didn’t change much.

Frequently Asked Questions (FAQs)

Is diminished value the same as depreciation?

Diminished value and depreciation are different. Depreciation is the normal decrease in a car’s value due to wear and tear over time. But diminished value is the actual or perceived reduced market value of a vehicle after being in an accident and getting damaged.

How do I calculate the diminished value of my car?

You can ask your insurance agent to help you understand how value change is determined and how such claims are calculated in your state or by the insurer. Some insurers have specific formulas that take into account whether the damage was severe, moderate, or minor.

Not every car insurance company in every state will cover diminished value claims, and only some states explicitly offer case decisions regarding diminished value. Even if you have documented the loss of value, an insurance company can still argue against your claim. Speak with a lawyer for legal advice regarding your policy or situation.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Matthiesen, Wickert & Lehrer, S.C. "Diminution in Value Cases in All 50 States."

  2. Missouri Department of Insurance. "Understanding Your Auto Claim."

  3. Office of Insurance Commissioner of Washington State. "How To File a Diminished Value Claim After an Accident."

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