Auto Diminished Value: Understand How It's Calculated

January 27, 2012

To understand how auto diminished value is calculated, drivers must first understand the true controversy around the idea of compensating a car owner for auto diminished value.

What Is Auto Diminished Value?

Auto diminished value is, put simply, the difference between what a vehicle is worth before an accident and what it is worth after an accident. Obviously, these figures are somewhat subjective. The fact is that although many mainstream car insurance companies claim that auto diminished value is not supposed to be part of a claim payment, some states have awarded diminished value amounts to drivers.

How Is Auto Diminished Value Calculated?

In cases where drivers successfully get paid for auto diminished value, it's calculated by some very careful research. First, a driver must use blue book values, certified appraisals and other estimates to document what the vehicle was worth before the accident. Then, again using certified appraisals as well as other evidence, the driver has to prove that the vehicle is worth significantly less money on the used car market after the accident, and after it has been repaired.

To get the best chance on diminished value claims, keep an up-to-date record of what your used car is worth in the current market, so that in the event of a crash, a certified appraisal company can help you prove that its value has indeed been diminished, even after repairs. Another good point is to follow judicial case history in your state around the idea of paying our diminished value claims.