Guides ›

Diminished value basics: what it is and when you can claim it

Last reviewed October 19, 2026 · General information, not legal advice. Rules vary by state and by policy.

"Diminished value" is the loss in resale value a car suffers because it now has an accident history, even after good repairs. It's often confused with total-loss disputes, so let's start there.

First-party vs. third-party claims

A third-party claim is made against the at-fault driver's insurer. A first-party claim is made against your own policy (for example, collision coverage). The Illinois Department of Insurance has a plain-English explainer on making a claim with another driver's insurer [1]. The distinction matters because diminished value is treated very differently in each.

• Third-party claims: In many states, you can seek diminished value from the at-fault driver's insurer as part of your property damage. Washington's insurance commissioner, for example, says diminished value claims are usually made against the at-fault driver's insurer and that you'll need to prove the loss in value [2].
• First-party claims: Many policies don't cover diminished value when the car is properly repaired. In Texas, TDI's Bulletin B-0027-00 states that the standard Texas personal auto policy does not provide first-party coverage for diminished value when the vehicle has been fully and adequately repaired, and notes that third-party claims (and uninsured/underinsured motorist claims) are a different matter [3].
• Georgia is a notable exception for first-party claims. In State Farm Mutual Automobile Insurance Co. v. Mabry, 274 Ga. 498 (2001), the Georgia Supreme Court held that diminished value is an element of loss insurers must consider under the policies at issue. Georgia's insurance regulator has not endorsed any particular formula for calculating it [4].

State rules differ widely. Connecticut's Office of Legislative Research has published a comparison of how states treat diminished value [5]; it's older, so check current law in your state.

How diminished value is measured

There's no single required formula. The basic idea is the difference between what the car would have sold for just before the accident and what it would sell for after repairs, with the accident on its history. You may see insurers use rule-of-thumb formulas; in Georgia, the regulator has said no formula is endorsed [4]. The most persuasive evidence is usually a written opinion from an independent, qualified appraiser or dealer explaining the market difference for your specific car, plus the repair records.

What helps a diminished value claim

• Proof the other driver was at fault (police report, insurer's liability decision)
• The final repair invoice and photos of the damage
• The vehicle history report showing the accident
• A written valuation from an independent appraiser or dealer
• Pre-accident condition evidence: mileage, service records, photos

Timing

Diminished value claims are subject to deadlines (statutes of limitations and policy terms) that vary by state. Don't sign a final release on the property damage claim without addressing diminished value if you plan to pursue it. If the amount is large, a licensed attorney in your state can tell you what applies.

Where TotaledRight fits

TotaledRight focuses on total-loss valuations: checking the insurer's actual cash value report. We don't prepare diminished value appraisals.

Sources

1. Illinois Department of Insurance, "Filing an Auto Claim with Another's Insurance Company." idoi.illinois.gov
2. Washington State Office of the Insurance Commissioner, "Filing an auto insurance claim." insurance.wa.gov
3. Texas Department of Insurance, Commissioner's Bulletin B-0027-00 (diminished value). tdi.texas.gov/bulletins/2000/b-0027-0.html
4. State Farm Mut. Auto. Ins. Co. v. Mabry, 274 Ga. 498 (2001); Georgia Insurance Commissioner directive on diminished value (2008), which states no formula is endorsed.
5. Connecticut General Assembly, Office of Legislative Research, "Diminished Value" report 2007-R-0011. cga.ct.gov/2007/rpt/2007-r-0011.htm

TotaledRight is not a law firm, appraiser or public adjuster. This guide summarizes public sources as of the review date; regulations change. Check your own policy and your state insurance department.