Diminished Value Claims in California - 5 key things to know (2023)

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Diminished Value Claims in California - 5 key things to know (1)

A diminished value claim, if successful, allows you to get compensation for the difference in the value of your vehicle before versus after the accident.

Five key things to know about diminished value claims in California are:

  1. what they recover,
  2. a car’s value can diminish in 3 different ways,
  3. who was at faultfor the accident matters,
  4. insurance companies will determine the diminished value, and
  5. proving diminished value can be difficult.

1. Diminished value claims compensate you for the reduction in your car’s value

If you are in a car accident that was caused by someone else, you deserve compensation. The lion’s share of your compensation will cover your

(Video) USAA Tried to Pay Us $18.14 How Did We Get $2,080.00? Diminished Value Claim | Full Story + Tips

  • medical bills,
  • pain and suffering, and
  • lost wages.

These are all losses from your personal injuries. However, you are also entitled to compensation for your car repair expenses. An often overlooked aspect of these property damages is the reduction in the value of a vehicle that was caused by the accident.

In California, a diminished value claim aims to recover compensation for that lost value from the at-fault driver’s insurance company.1

For example: Dave is involved in a car accident. Before the accident, his vehicle was worth $30,000. Post-accident, it is only worth $26,000. He files a diminished value claim with the at-driver’s insurer for the lost $4,000.

2. There are 3 types of diminished value claims

Motor vehicles can lose value after a car accident in 3 ways:

  1. the stigma of the vehicle’s new accident history makes its resale value diminish,
  2. the immediate diminished value after the accident and before any repairs are made, and
  3. the repairs themselves diminish the value of the vehicle.

Depending on the stage of your case, one or more of these options may be available to you.

Value diminished by stigma

The most common type of diminished value claim is to recover value lost because of the stigma of the crash. When selling or trading in the vehicle, your prospective buyer is likely to research the vehicle’s crash history. They are likely to find information about:

  • the severity of the accident,
  • any structural damage done to the vehicle,
  • where the damage occurred, and
  • what repairs were made.

When potential buyers find that the vehicle has been involved in an auto accident, they are likely to reduce their offer for it. They reduce the offer because there is a stigma against vehicles that were involved in a crash. They may worry that repairs were not done well. They may also be concerned about latent problems from the accident.

The resulting reduction in value stems from the car accident. When that accident was not your fault, you deserve compensation for it.

(Video) How Diminished Value Is Calculated

In California, these types of diminished value claims are also known as:

  • inherent diminished value,
  • stigma damage, or
  • residual diminished value.

This is different from depreciation. Depreciation is the diminished value of your car that is due to normal wear and tear. Diminished value is for value lost due to a car accident.2

Immediate diminished value

A rare type of diminished value claim to file is for your vehicle’s immediate diminished value. This is the reduction in value caused by the accident before repairs have been made.

When made, these types of claims demand more compensation than the others.

However, they are rare because your auto insurance company typically pays the cost of repairs. Once those repairs have been made, these types of diminished value claims cannot be filed.3

Value diminished by repairs

You can also demand compensation for vehicle value that was diminished by repairs. Many repair shops, especially those used by inexpensive car insurance companies, do not make the highest quality repairs. They may:

  • use aftermarket or used auto parts,
  • employ corner-cutting techniques, or
  • paint the affected car part a slightly different color than the rest of the vehicle.

These repairs may be good enough to make the car reliable and safe. However, they can nevertheless reduce the vehicle’s value. Because you suffered these repair-related losses from the accident, you are entitled to compensation for them.4

3. If you were at fault for the car accident, you may not recover compensation

Many car insurance policies exclude coverage for the diminished value of the policyholder’s vehicle, if the policyholder was at faultfor the damage. Not all do, though. You should review your car insurance policy before filing one of these claims against your own insurance company.

(Video) Diminished Value Claim - How I got State Farm to Pay the Full Amount! (True Story)

For example: Kandace bumps into the wall of a building while parking her car. The impact cracks the paint on her fender. The repairs mismatch the color of her new fender with the rest of the vehicle. This reduces the value of the car. However, because Kandace was responsible for the accident, she might not be able to recover the diminished value of the vehicle.

A couple of state laws, however, require insurance providers to pay diminished value claims, regardless of who was the at-fault party.5

4. Insurance companies calculate diminished value

In California, you file diminished value claims with an insurance company. That insurance company will determine how much value the vehicle lost in the crash. Most insurance companies and their adjusters use the 17c Formula to calculate diminished value.

This diminished value formula begins with the appraisal value of your vehicle. This is the pre-accident value of your car, in its original condition. It often comes from the National Automobile Dealers Association (NADA) or Kelley Blue Book.

The appraisal value is then multiplied by 0.1. This represents the maximum diminished value that a vehicle can suffer from a crash. The number is often referred to as the base loss of value.

The base loss of value is then altered by a damage multiplier. The damage multiplier ranges from 0 to 1. Higher numbers are for more severe damage from the wreck:

  • 0 – there was no structural damage or replaced panels,
  • 0.25 – minor damage to panels or the vehicle’s structure,
  • 0.5 – moderate damage to panels or structure,
  • 0.75 – major panel and structural damage, and
  • 1.0 – severe damage to the vehicle’s structure.

The resulting number is then subjected to a mileage multiplier. Older vehicles that have been driven more lose their value less than new ones do. The results of the damage multiplier are themselves multiplied by:

  • 0 – for vehicles with 100,000 miles or more,
  • 0.2 – vehicles with 80,000 to 99,999 miles,
  • 0.4 – 60,000 to 79,999 miles,
  • 0.6 – 40,000 to 59,999 miles,
  • 0.8 – 20,000 to 39,999 miles, and
  • 1 – for vehicles with less than 20,000 miles.

For example: Melanie’s 2018 Honda Accord is damaged in a car crash. She files a diminished value claim against the at-fault driver’s insurance company. The insurance company uses the 17c Formula as a diminished value calculator. The vehicle is appraised by NADA at $21,600, so its base loss of value is $2,160 ($21,600 times 0.1). Because there was moderate damage, the base value is multiplied by 0.5 down to $1,080 ($2,160 times 0.5). Because Melanie’s car had 57,000 miles on it at the time of the accident, the mileage multiplier is 0.6. This puts her diminished value claim at $648 ($1,080 times 0.6).

(Video) STATE FARM Diminished Value Claim - How to Get PAID Fairly and Quickly!

However, the 17c Formula is controversial. It often seems to undervalue a vehicle’s diminished value. If you are unsatisfied with the payout that is offered, you may want to get the legal advice of a car accident lawyer from a reputable law firm.6

5. Proving your case can be tricky

Some insurance companies will demand additional evidence before paying a diminished value claim. This is especially common when your diminished value claim is high. There are several ways that you can prove the extent of the diminished value. You can:

  • hire an independent appraiser to value your vehicle,
  • get a sales manager at a local auto dealership to make a written estimate of what would have been offered for your vehicle, had it not been in the accident, or
  • sell the vehicle or offer it as a trade-in.

You can then compare the sales or appraisal price of your particular vehicle against other vehicles of the same make, model, and mileage. If yours is lower than the normal market value, the difference would be the diminished value of your vehicle from the accident. This number can support your insurance claim.

Legal References:

  1. See, for example, Carson v. Mercury Ins. Co., Court of Appeal of California, Fourth Appellate District, Division Three, 2012) 210 Cal. App. 4th 409; Hansche v. Jepson (Court of Appeal of California, Fourth Appellate District, Division Three, 2017) G052328.
  2. See, for example, Salka v. Dean Homes of Beverly Hills, Inc. (Court of Appeal of California, Second Appellate District, Division Four, 1993) 23 Cal. App. 4th 952.
  3. See, for example, Noteboom v. Farmers Tex. County Mut. Ins. Co. (Court of Appeals of Texas, Second District, Fort Worth, 1993) 406 S.W.3d 381
  4. See, for example, Burgers v. Cardenas (Court of Appeal of California, Fourth Appellate District, Division Three, 2017) G051833.
  5. State Farm v. Mabry (2011) 556 S.E.2d 114 (2011).
  6. Angelica Leicht, Diminished Value Claims Explained, Forbes (November 9, 2022).

About the Author

Diminished Value Claims in California - 5 key things to know (2)

Neil Shouse

A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). He has been featured on CNN, Good Morning America, Dr Phil, The Today Show and Court TV. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys.

(Video) Small Claims - Diminished Value Auto Lawsuit


How is a diminished value claim calculated in California? ›

Immediate diminished value can be calculated as the difference in resale value of a vehicle before the damage occurred and the resale value before repairs have been made after damage has occurred.

How do you determine the value of a diminished vehicle? ›

For example, if the market value of your vehicle is $15,000 with moderate damage to structure and panels and 20,000 miles, your formula to calculate diminished value would be: $15,000 x . 10 = $1,500 which would be the maximum you would receive for a diminished value from an auto insurer.

Does California recognize diminished value? ›

California is a diminished value state, which means you may be entitled to the diminished value of your vehicle after an auto accident. The statute of limitation on diminished value claims in California is 3 years, and California does have uninsured motorist coverage for diminished value.

How do you calculate diminished? ›

Diminished chords are formed by combining the root, flatted third (minor third) and flatted fifth of the major scale (1, ♭3, ♭5). For example, the notes of the C major scale are C, D, E, F, G, A, B. To form C diminished, you combine the notes, C, E♭ and G♭.

How do you write a demand letter for diminished value? ›

I hereby request reimbursement for my vehicle's diminished value in the amount of $[amount of DV + cost of appraisal] (this amount includes $[cost of appraisal) for the cost of an appraisal as it is an additional indirect loss). I am reasonable and want nothing more than to be indemnified for my loss.

What is the statute of limitations for a diminished value claim in California? ›

California allows you to file a claim to compensate for your car's diminished value after a car accident. The statute of limitations to file this type of claim is three years from the date of the accident.

How much does body damage affect car value? ›

The loss of value is in many cases between 40 to 60 percent, money you will not get when you sell or trade it in. In fact, some new car dealers will not take a vehicle in trade if it shows to have been in an accident no matter who did the repair work.

How much does a car value drop after an accident? ›

It could depreciate up to 25 percent faster than the average rate, depending on the vehicle's age, condition before the wreck, and condition after the wreck.

What is inherent diminished value? ›

Inherent diminished value

This type of claim refers to the car's market value once it's repaired after an accident. Even if the car is “good as new” after repairs, the accident history decreases the car's worth for potential buyers. This is the most common type of diminished value claim.

What qualifies diminished capacity? ›

Penal 125.15(1)). The diminished capacity plea is based on the belief that certain people, because of mental impairment or disease, are simply incapable of reaching the mental state required to commit a particular crime.

What is inherent diminished value California? ›

Inherent Diminished Value

This refers to when a vehicle loses its value simply because it was involved in an accident. Even if the vehicle is fully repaired, the blemish on its accident history report brings down its value.

What is classed as diminished responsibility? ›

A conviction for manslaughter by reason of diminished responsibility necessarily means that the offender's ability to understand the nature of the conduct, form a rational judgment and/or exercise self-control was substantially impaired.

How do you calculate diminished depreciation? ›

Diminishing value

It is calculated by dividing 200% by an asset's useful life in years (150% if the asset was held before 10 May 2006). For example, the diminishing value depreciation rate for an asset expected to last four years is 37.5%.

Can I write off diminished value on taxes? ›

Your Loss In Diminished Value May Be Tax Deductible

he good news for consumers is Diminished Value can be and oftentimes is claimed as a tax deduction. The resale value of a vehicle with a damage history is oftentimes worth substantially less than a comparable vehicle with no damage history.

What is devaluation of vehicle after accident? ›

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.

How do you write a simple letter of demand? ›

Frequently Asked Questions (FAQ)
  1. Type your letter. ...
  2. Concisely review the main facts. ...
  3. Be polite. ...
  4. Write with your goal in mind. ...
  5. Ask for exactly what you want. ...
  6. Set a deadline. ...
  7. End the letter by stating you will promptly pursue legal remedies if the other party does not meet your demand.
  8. Make and keep copies.

What is an example of a letter of demand? ›

I refer to my invoice dated 10 August 20xx that was due for payment by 10 September 20xx. I ask that Fantastic Florists pay me the amount of $4,000 by 29 October 20xx. If I don't get paid this amount, I may start legal action against Fantastic Florists to recover the debt without further notice.

What should you not put in a demand letter? ›

Using abusive or threatening language will not work in your favor — not only will it make the defendant less likely to want to settle your claim, it could even cause damage to your actual case. Beyond that, you should never include dishonest or misleading details in your demand letter.

What is depreciation of value claim? ›

What is Depreciation in Insurance Claims? Your dwelling and most of its contents – such as your roof, laptop, and furniture – may lose value over time due to factors such as age and wear and tear. This loss in value is commonly known as depreciation.

Is there a time limit to file an insurance claim in California? ›

Notify your agent and/or your insurance company immediately. If anyone is injured or the vehicle damage exceeds $750.00, you must report the accident to the Department of Motor Vehicles within 10 days. Failure to notify the DMV may result in the suspension of your driver's license.

What is the cash value of my car? ›

Actual cash value (ACV)

It is determined by the replacement cost of your vehicle minus depreciation, which considers things like age and wear and tear. Most insurance policies cover the actual cash value of your car in the event of a claim and will use a third party to determine the ACV of your vehicle.

What is considered extensive damage to a car? ›

Severe vehicle damage.

If your vehicle has suffered major structural damage—such as a bent frame—that makes it unsafe or impossible to drive, it is defined as severe. In many cases, you might assume that a vehicle that has suffered severe damage is totaled and beyond repair.

How much do dents devalue a car? ›

An average accident can decrease a car's value instantly (and permanently) by 10 – 25% annually, whereas an accident that only creates light damage (such as light scratches or small dents that don't impact the paint) will only decrease its value by 5-15%.

What affects car value the most? ›

In brief, the main factors affecting a used vehicle's price are mileage and condition. Options, location, and color also playing a role. “As mileage increases, so does wear and tear,” said Alec Gutierrez, Director, Product Management for Cox Automotive Inc.

What is a good settlement offer for a car accident? ›

A good car accident settlement offer is one that fully covers your medical expenses, property damage, and time off from work. It compensates you adequately for the pain and trauma you have experienced related to the accident. A skilled attorney can evaluate your settlement offer and advise you if it is reasonable.

Do fender benders show up on Carfax? ›

Among the risks is that a vehicle was in an accident that wasn't reported to an insurance company. That fender-bender won't show up on a Carfax Vehicle History Report because there is no official record.

Does Kelley Blue Book account for accidents? ›

Vehicle history reports detail a car's ownership, title status, accident history, and more. To get a report on a car you want to buy, you'll typically need to have its 17-digit vehicle identification number, or VIN.

How do I get my insurance depreciation back? ›

Generally, to recover the cost of depreciation, you must repair or replace the damaged item, submit the invoices and receipts with the claim, and provide copies of the original claim forms. Every insurance company has its own procedures for such claims, so a chat with a representative will be needed.

What happens if you are at fault in a car accident in California? ›

What the California at-fault accident law means is that whoever is responsible for the accident will be liable to pay for the damages. All parties involved in an accident should file a claim with the insurance of the person responsible for the accident.

What does lost value mean? ›

Loss Value means the amount of money indicated in a given loss to include costs of repairs or replacement costs.

What are the 4 key elements of diminished responsibility? ›

In order to prove he was suffering from diminished responsibility a defendant must show:
  • He was suffering from an abnormality of mental functioning;
  • From a recognised medical condition;
  • Which substantially impaired his ability to understand his conduct, form a rational judgment or exercise self-control;
Feb 6, 2017

What type of evidence is necessary for diminished responsibility? ›

Definition of Diminished Responsibility

It must be shown that the abnormality substantially impaired his/her ability to understand the nature of his/her conduct, form a rational judgment, and exercise self-control.

What must a defendant do in order to prove a diminished capacity defense? ›

The defendant must suffer from a recognized mental disease or defect. The disease or defect must cause the defendant to lack the capacity to form the required mental state. The expert testimony must otherwise satisfy the rules for admission of expert testimony.

What is California's ACV for total loss? ›

California's Total Loss Law

According to this formula, insurance companies in California can only declare your car as totaled if the sum of the car's salvage value and cost of repairs is the same as, or more than, the car's actual cash value.

What is diminution in value of vehicle case law? ›

The case law around it is based on a case called “Payton-v-Brooks” 1974 where it was argued that, if you have two vehicle at a point of sale, that the one that had the connotation of being involved in an accident, would be worth less than one that had.

How do I prove diminished value in PA? ›

In order to recover the losses you must have a diminished value appraisal completed by a Professional Automobile Appraisal Company, such as Autoloss. Also, if the other party does not have insurance and you carry uninsured/ underinsured motorist coverage you may be able to claim diminished value under your policy.

What is McNaughton's rule? ›

Section 84 IPC embodies McNaughton rules as follows: “Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act or that he is doing what is either wrong or contrary to the law.”

Can depression be used for diminished responsibility? ›

Depression and Criminal Defence

Depression has been used as a basis for an insanity defence. Clinical depression, even when it is non-psychotic may provide enough ground for a legitimate excuse for criminal or otherwise immoral failures to act.

What happens if diminished responsibility is successful? ›

What is the impact of a successful plea of diminished responsibility? If the defence successfully pleads diminished responsibility, the murder charge must be downgraded to that of voluntary manslaughter.

How do you calculate diminished value in California? ›

Immediate diminished value can be calculated as the difference in resale value of a vehicle before the damage occurred and the resale value before repairs have been made after damage has occurred.

What are the 3 depreciation methods? ›

The three methods of depreciation are:
  • Straight Line Method.
  • Written Down Value Method.
  • Units of production method.

What are the 2 depreciation methods? ›

Methods of Depreciation and How to Calculate Depreciation

Some of the methods for calculating depreciation are: Straight-line method. Written down Value method.

Is diminished value negotiable? ›

Fortunately, the answer is YES. You can get Diminished Value or Diminution In Value of your car, truck or other vehicle post repair if you are willing to fight for it!

How do I avoid paying taxes on depreciation? ›

Investors may avoid paying tax on depreciation recapture by turning a rental property into a primary residence or conducting a 1031 tax deferred exchange. When an investor passes away and rental property is inherited, the property basis is stepped-up and the heirs pay no tax on depreciation recapture or capital gains.

What is the 17c formula? ›

The so-called 17c formula (download the 17c Formula Worksheet in Excel) begins with the pre-accident value of a vehicle often based on the National Automobile Dealers Association's guide, followed by a series of value adjustments. The formula includes modifiers for the severity of damage and mileage on the vehicle.

What are the two types of depreciation for vehicles? ›

The IRS offers two depreciation deduction methods: straight-line method and accelerated depreciation. While straight-line gives you equal deductions each year besides the first and last year, the accelerated method provides you with larger deductions in your first few years of ownership.

What is depreciation reimbursement in vehicle insurance? ›

Depreciation reimbursement cover is a claim which replaces the damaged car parts from the accident without having to pay for single damage. The company gives a full claim without any deduction for depreciation on the value of car parts.

How much does a vehicle lose in value after an accident? ›

During the first three years, the car depreciates up to an additional 55 percent. Add a car wreck into the mix, and the valuation will fall even lower. It could depreciate up to 25 percent faster than the average rate, depending on the vehicle's age, condition before the wreck, and condition after the wreck.

How do insurance adjusters determine the value of a car? ›

It is determined by the replacement cost of your vehicle minus depreciation, which considers things like age and wear and tear. Most insurance policies cover the actual cash value of your car in the event of a claim and will use a third party to determine the ACV of your vehicle.

How to negotiate with insurance adjuster? ›

Show the adjuster that you're willing to renegotiate your offer by lowering it slightly, and they'll typically follow by raising theirs. This can be done several times until a final offer is accepted. Keep in mind that the insurance adjuster is a human just like you.

What is a reasonable negotiable car reduction price? ›

Based on your pricing homework, you should have a good idea of how much you're willing to pay. Begin by making an offer that is realistic but 15 to 25 percent lower than this figure. Name your offer and wait until the person you're negotiating with responds.

What is considered major damage to a car? ›

If your vehicle has suffered major structural damage—such as a bent frame—that makes it unsafe or impossible to drive, it is defined as severe. In many cases, you might assume that a vehicle that has suffered severe damage is totaled and beyond repair.

What happens if you are at-fault in a car accident in California? ›

What the California at-fault accident law means is that whoever is responsible for the accident will be liable to pay for the damages. All parties involved in an accident should file a claim with the insurance of the person responsible for the accident.

Is diminished value the same as depreciation? ›

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.

What losses can be written off? ›

A write-off primarily refers to a business accounting expense reported to account for unreceived payments or losses on assets. Three common scenarios requiring a business write-off include unpaid bank loans, unpaid receivables, and losses on stored inventory.


1. Winning Diminished Value Claims | Galileo Law | Attorney Paul Veillon
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3. Calculate Your Vehicle's Diminished Value @ MyCarIsWorthLess.com / Interview with Viraf Baliwalla
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