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After a car accident, you will frequently interact with your insurance company regarding details of your accident, inspections, and repairs. If your vehicle has suffered significant damage, you may also consider discussing your vehicle’s diminished value. It is essential to become familiar with the concept and how it works.

What Is Meant by “Diminished Value”?

After a car accident, your vehicle will undoubtedly suffer damages. Unfortunately, even after your car is repaired and looks like new, it will never be the same again. This will present issues for you in the future, especially when it comes time to resell your vehicle. Buyers will look at your vehicle as altered and will likely not want to pay you what the car would typically be worth. This is diminished value.

Diminished value is the difference between what your vehicle was worth pre-accident and what it is worth post-accident.

How Do I File a Diminished Value Claim in Texas?

Firstly, to qualify for diminished value, you must not be the at-fault party in the accident. If you were not at fault, you might be able to file a diminished value claim in Texas. For a diminished value claim, you must prove three things:

  • Your vehicle lost value;
  • There is a dollar amount to the value lost; and
  • The insurance company will allow you to recover the diminished value.

Your attorney can help you compile all the necessary information for your diminished value claim.

Types of Diminished Value

There are three types of diminished value. They include:

  • Inherent diminished value,
  • Immediate diminished value, and
  • Repair-related diminished value.

Inherent diminished value is the most commonly used type of diminished value. This kind of diminished value occurs when a vehicle loses value due to a history of damage. 

Immediate diminished value represents the difference between the resale value right after an accident but before repairs. This type of diminished value is not often used.

Repair-related diminished value represents the loss of a vehicle’s value based on low-quality repairs after a car accident. This kind of diminished value rests on the idea that the car cannot be restored to its original condition. 

How Do I Calculate the Diminished Value of My Car?

It is crucial to save all documentation and receipts from your car’s repairs. These items may come in handy in the future for your claim. 

Generally, most insurance companies use a calculation known as “17c.” This formula works to produce a value for your vehicle. The steps are as follows.

Calculate the Value of the Car

You can use various tools to calculate the current value of your car. The value of your vehicle is dependent on the year, make, and model. 

Apply a 10% Cap to the Value

This formula takes the value of the vehicle and multiplies it by .10 to get a base loss of value.

Apply a Damage Multiplier

Now you will take any structural damage to the vehicle into account. For this step, you must take the number from step 2 and calculate it according to the level of damage:

  • 1 = severe structural damage
  • .75 = major damage to structure and panels
  • .50 = moderate damage to structure and panels
  • .25 = minor damage to structure and panels
  • 0 = no structural damage or replaced panels

Your Vehicle’s Mileage

Next, you will take your vehicle’s mileage into consideration. Take the number from step 3 and multiply it depending on your car’s mileage:

  • 1 = 0-19,999 miles
  • .80 = 20,000-39,999 miles
  • .60 = 40,000-59,999 miles
  • .40 = 60,000-79,999 miles
  • .20 = 80,000-99,999 miles
  • 0 = 100,000+ miles

These four steps will help give you your vehicle’s diminished value.

How to Submit a Diminished Value Claim

You may open up a conversation about a possible diminished value claim with your insurance adjuster. You may explain your situation to them. Ultimately, you may need to submit a diminished value demand letter to your insurance company. This letter should include:

  • An explanation as to the purpose of the letter;
  • The legal basis of your diminished value claim;
  • The facts of your claim, with proof, if possible; and
  • An explanation of the value of your diminished value claim.

While you can do this yourself, we recommend that you seek help from an experienced Texas attorney. An attorney understands Texas law and can better represent you in this matter.

Choose The BFH Law Group

The BFH Law Group is a young law firm, composed of seven passionate attorneys. We recognize that every situation is different and pride ourselves on offering our clients personalized experiences. We know you have options, but we work diligently to set ourselves apart through our dedication, hard work, and fierce representation. Contact us today for your no-obligation case evaluation, and let’s see how we can help you. 

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BFH Law Group Staff

We represent clients in a wide array of civil litigation matters including personal injury, maritime, insurance, and estate cases. Our attorneys collectively represented insurance companies for decades, handling maritime, trucking, property damage, and personal injury cases.