How to Calculate Diminished Car Value After Accident

It comes out of nowhere. You’re driving along, singing along to the latest Miley Cyrus tune on your cranked-up radio. Suddenly, your world is a mess of broken glass, crunching metal, and deflating airbags. In just a split second, you’ve begun the arduous and unwanted task of getting your car fixed and recouping the costs.

A car accident that damages a vehicle will instantly 'diminish' the value of the car. If you need to regain some of this lost value you can sell your damaged car for a fair market price quickly online.

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When you insure your car, you glance over the fine print and jump to the signature. It’s all there, right? And since you don’t actually expect to have an accident, you haven’t considered the implications of what you’re signing. But one of those sections probably tells you all about diminished value.

Diminished value, also known as inherent diminished value, is most easily explained with a scenario.

Car 1 and Car 2 are identical in every way – mileage, color, year, make, and model. They are both valued the same, understandably. Let’s say it’s $10,000.

Car 1 gets into an accident, and it’s pretty significant frame damage. But it gets fixed, and it looks good as new once again. But on the vehicle history report, there’s now a big difference that will never disappear.

Now, you have that same choice between buying Car 1 and Car 2. Which one do you choose? The answer every time will be Car 2, the one that has never been in an accident.

Car 1 will need to be sold at a lower price, otherwise everyone will always choose Car 2 instead. It has a diminished value, which is the difference between the two cars’ prices.

It isn’t the car’s actual selling price, but rather, the lost value of a car after an accident and after the expensive collision repairs.

Since the diminished value assessment is based on the current market price of the vehicle, and the accident damage variable, it's very difficult to create an extremely accurate diminished value claim calculator.

Diminished value formulas might not be accurate, since you could potentially sell the car for more than your insurance company is saying.

This leaves money on the table for you when comparing your damaged car sale value to an average diminished value settlement.

If you’re asking, “Are diminished value and depreciated value the same?”, the answer is NO. Depreciated value is a comparison against the vehicle’s own value.

For example, a one-year-old car might have a value of $20,000. Just due to normal wear and tear, accumulated mileage, and age, the same car might only be worth $10,000 a few years later. Diminished value is a sudden change, like an accident.

Depreciated value is often called the car’s NADA value. NADA publishes used car values along with their average selling price every month for dealers. You can also access a NADA car value online for yourself.

You’d be surprised at the diminished car value after an accident for newer cars. But as a car gets older, the diminished car value is much smaller.

Most insurance companies use a rule known as 17C for a diminished value calculator. It considers the car’s value before the accident and applies factors to arrive at a diminished value appraisal. Factors include:

1. A base loss value compared with its NADA value, typically 10%.
2. A major damage multiplier on that number.
3. A deduction based on the car’s mileage.

Your insurer may have their own calculation for diminished value. One thing you can count on is that they’ll always work to the insurance company’s benefit, not yours.

Prepare to battle it out with your insurance adjuster to get a fair diminished value claim, which will get paid out to you.

You have a car that doesn’t have its full value anymore. It’s not like the typical car depreciation rate either – your car suddenly is worth less, but not worthless. What can you do about your car’s lost value?

You’re likely entitled to a diminished value claim through your insurance company. But take note of your policy information – you are probably only entitled to get paid if the accident wasn’t your fault.

In any case, start with your insurance company. Contact your representative to figure out how to start the diminished value claim, and get a diminished value appraisal near you. It might net you a few hundred bucks, or more if the accident was serious and your car was primo.

But after you settle your diminished value claim, you’re still stuck driving a car with a serious value problem, and it may be difficult to sell your car fast.

If that doesn’t sit well in your craw, think about selling your car a different way, like perhaps on a car buying website. If you have diminished car value, it’s not going to be easy to sell it like you normally would.

When someone asks for a vehicle history report, it’s going to be on full display in big bold letters that your car has been in a serious accident. You might have a few people interested until they find out about the accident, then disappear on you.

Don’t have time to sit around, waiting to sell your car? Give CarBrain a shot. It’s easy, it’s fast, and it’s free. Just enter your vehicle information into CarBrain’s proprietary system along with some details about its condition, and you’ll receive a guaranteed offer.

If it looks good to you, accept the offer, and CarBrain will put money in your hand. We’ll even pick up your car wherever it is, at no cost to you. Get your offer to see how much your car is really worth now.