How to make a diminished value claim

In the insurance industry, there are three types of diminished value to know about:

• Immediate diminished value

The resale value of the car immediately prior to an accident and value immediately after the accident, prior to repairs.

• Inherent diminished

The difference in the value is between the resale value of the car before the accident and after it has been repaired.

• Repair-related diminished value

Any loss of value resulting from incomplete or faulty repair work.

Once you know which diminished value you’re claiming, you will choose whether you are first party or third party. Keep in mind that every state has its own diminished value claims laws set in place. You can find where your state stands with first or third party laws at https://www.mwl-law.com/wp-content/uploads/2013/03/diminution-of-value-in-all-50-states.pdf.

Once that step is done, you will need an appraisal depending on your car’s situation. Keep in mind that if this is an accident situation, no one’s going to pay you a large sum of money for a car with a tainted history. It’s always wise to document your car’s worth after necessary repairs via Kelly Blue Book. It’s important to request a trade-in value letter from the car dealer that states the lower value is due to previous damage, though the repairs have been made.  

The hardest part of this whole ordeal will be to request the other party’s insurance company to compensate for the diminished value. Sometimes it can turn into a negotiation situation when the insurers refuse to pay your claim, or offer a small compensation that is calculated by an industry formula. If this is the case, then there’s nowhere else to turn but the small claims courts. However, keep in mind that these courts do have jurisdictional limits. When filing a small claims case, visit the court clerk’s office to request what forms you’ll need to submit for a case.