How to File a Diminished Value Claim: A Step-by-Step Guide

If you've recently been in an accident that wasn’t your fault and had your vehicle repaired, you may be entitled to compensation for the loss in market value—known as diminished value. A common question we hear is: "How do I file a diminished value claim?" or "What do I need to do to file a diminished value claim?" This blog post will walk you through the process so you can confidently pursue the compensation you deserve.

Step 1: Understand What Diminished Value Means

Diminished value refers to the reduction in your vehicle’s market value after it's been involved in an accident, even after quality repairs have been completed. Even if your vehicle looks and drives like new, a reported accident can impact its resale or trade-in value.

There are three types of diminished value:

• Inherent Diminished Value: The most common type. This occurs simply because the vehicle now has an accident history.

• Repair-Related Diminished Value: Arises from substandard or incomplete repairs.

• Immediate Diminished Value: The loss in value immediately after the accident, before repairs are made.

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Step 2: Determine If You’re Eligible

To successfully file a diminished value claim, the following should generally apply:

• You were not at fault in the accident.

• Your vehicle has been fully repaired and the damage exceeded $1,000.

• Your vehicle is not leased (you must be the registered owner).

• The vehicle is typically less than 5 years old.

• The claim is being made within the statute of limitations. For example in your state (in Arizona, it’s 2 years).

Step 3: Gather Documentation

To build a strong claim, collect the following:

• A certified diminished value appraisal (from a licensed IACP appraiser like us)

• A copy of the repair estimate and final invoice

• Photos of the damage (before and after repairs),

• A CARFAX or vehicle history report showing the accident

• Documentation of recent vehicle maintenance or upgrades

Step 4: Submit Your Claim

Contact the at-fault party’s insurance company (or your own if available under uninsured motorist coverage). Ask how to submit a diminished value claim and provide:

• A written demand including the appraised diminished value amount

• Supporting documents

• Your contact information and claim number

Some insurers have specific forms or departments that handle these claims, so be sure to ask.

Step 5: Be Ready to Negotiate

Most insurance companies will push back or make a lowball offer. This is common. Stick to the facts, use your certified appraisal as leverage, and be persistent. You may need to:

• Request a supervisor review

• Provide additional documentation

• Reiterate your legal right to recover diminished value under tort law

Step 6: Consider Escalation If Necessary

If the insurance company refuses to pay a fair amount:

• Request written explanation of denial

• File a complaint with your state’s Department of Insurance

• Consider invoking your right to appraisal if it’s a first-party claim

• Consult legal counsel if you plan to file in small claims court

Final Thoughts

Filing a diminished value claim doesn’t have to be overwhelming. At Collision Claims Advisors, we specialize in helping consumers like you navigate the process from start to finish—with certified reports, demand letters, and expert guidance that gives you the confidence to push back and claim what you’re owed.

Need help? Request a consultation today or start your certified appraisal online.

Understanding Diminished Value: How Appraisals Define Loss and Protect Your Financial Position

When your vehicle is involved in an accident, even after it has been meticulously repaired, its market value may not be the same as it was before the incident. This reduction in value is known as "diminished value," and it can have a significant impact on your financial position. In this article, we will explore the concept of diminished value, how it affects you as a vehicle owner, and the crucial role that appraisals play in defining that loss. Drawing from my career experience, I’ll also highlight relevant case law and real-world examples where appraisals made a substantial difference in claim outcomes.

Understanding Diminished Value

Diminished value refers to the reduction in a vehicle’s market value after it has been damaged in an accident and subsequently repaired. Even when repairs restore the car to pre-accident condition, potential buyers may view a vehicle with a damage history as less desirable, resulting in a lower resale or trade-in value. In my experience, many vehicle owners don’t realize the impact of diminished value until they try to sell or trade their vehicle and discover it’s worth far less than expected.

The Role of Appraisals in Diminished Value Claims

A professional appraisal is one of the most important tools for protecting your financial position after an accident. While an appraisal doesn't necessarily protect the car's market value, it serves to define the loss in value that results from the accident. This clear, objective assessment is critical when filing a diminished value claim with your insurance company.

From my perspective, an appraisal provides the evidence needed to substantiate your claim, showing precisely how much value your vehicle has lost. Without a solid appraisal, insurance companies may attempt to downplay or deny diminished value claims altogether.

For example, in State Farm Mutual Automobile Insurance Co. v. Mabry (2001), the Georgia Supreme Court ruled that State Farm must pay for diminished value claims, even if a vehicle was repaired to pre-accident condition. The court recognized that a vehicle's value could still decrease due to its accident history, which must be compensated. Read more about the Mabry case.

Another example is the Jacques v. Allstate case, where the plaintiff successfully used an appraisal to demonstrate the loss in value after an accident. This appraisal was key to obtaining a significant settlement, highlighting the importance of accurate documentation in these claims. See details of the Jacques v. Allstate case.

How Appraisals Support Financial Compensation

Throughout my career, I’ve seen numerous cases where a well-supported appraisal was essential for securing fair compensation. In one particular case, a client’s vehicle was in a serious accident, and while the repairs appeared flawless, the car’s value had dropped significantly. With a thorough appraisal, we were able to clearly define the diminished value, which led to a successful claim and a settlement that properly indemnified the client.

An appraisal involves more than just evaluating the damage; it requires a deep understanding of market trends, vehicle history, and repair quality. That’s why I always recommend that vehicle owners obtain a professional appraisal after an accident, especially if they plan to file a diminished value claim. It’s not only about knowing the value but also about ensuring that you’re fully compensated for your financial loss.

Conclusion: Protecting Your Financial Position

In conclusion, while an appraisal may not restore your vehicle’s original market value, it is a vital tool in defining the loss and ensuring you are fairly compensated for it. Diminished value is a real concern for vehicle owners, but with the right approach and proper documentation, you can protect your financial position. As demonstrated in cases like Mabry and Jacques, being proactive and informed can make all the difference when dealing with insurance companies. Check out this guide on how to prepare for a diminished value claim.

In my view, understanding and addressing diminished value is not just about getting what you’re owed—it’s about ensuring you don’t suffer additional financial loss after an accident. By taking the right steps, you can safeguard your investment and move forward confidently.