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What Is Diminished Value on a Vehicle?

Choosing to own a new car can be one of the best decisions you will ever make, especially if you are the kind of person who spends your days moving around. And while owning a car can have a profound effect on your normal life, this does not mean that driving is easy or that it doesn’t come with its dangers.

Whether that be breakdowns or angry drivers, there are numerous obstacles that could make driving your vehicle unpleasant. 

These days, many car owners often find themselves involved in a rear-end collision or a broadside accident, which can leave you seriously wounded and your car damaged beyond repair. Following this, you may find it hard to sell your car due to the crash, which could lower the price considerably from its original cost.

So how can you sell your car without losing the money that was lost? Well, this is where diminished value could prove useful. 

In the following article, we have gathered some important information concerning the diminished value and how you can claim it in the state of Texas. We have also explained the different types of diminished value that exist and how this could impact the cost once you make your claim.

So if you want to learn more about this particular topic, you can find everything you need in the sections below… 

What Is Diminished Value

What Is Diminished Value? 

Diminished value is a legal term that refers to the difference in your vehicle’s market value after it has suffered an auto accident. In most cases, the market value of your car will begin to decrease once the accident has taken place, even if the vehicle in question has been restored to its former condition. 

This is because the vehicle’s report will now have a recorded accident among its information, which can make it harder to sell to potential buyers. 

However, this does not mean that diminished value applies to all damaged vehicles, as older models may be worth more after an accident due to the addition of new parts. It is also important to note that the diminished value of your car can also be influenced by the age and condition of the vehicle. 

Can You Claim Diminished Value In Texas?

If you are a Texas resident and find yourself in an auto accident, then you will be able to file for a diminished value claim. This is because Texas is a diminished value state, which means the practice is commonly accepted and acknowledged by the law. 

However, this does not mean that filing for diminished value is simple, as you will need several qualifications to have the claim approved. 

In accordance with Texas law, the statute of limitations on diminished value is two years, with the state also boasting uninsured motorist coverage for diminished value. However, you cannot submit a claim if you are considered the at-fault party or if the crash was caused by other means beyond your control. 

Beyond this, you will also need to provide evidence that your vehicle has lost its original value. 


What Kinds Of Diminished Value Are There? 

There are currently several different kinds of diminished value available in Texas, which is why we have compiled the following list: 

  • Repair Related Diminished Value
  • Repair related diminished value refers to the loss of your vehicle’s worth due to the inability to repair the suffered damage, which means your car currently has a lower market value due to the repairs and not the collision itself. 

  • Immediate Texas Diminished Value
  • Immediate diminished value refers to the difference between the resale value of your vehicle before the accident and the resale value before the damage has been repaired. 

    The term also refers to the loss of value caused by the insurer’s involvement, which means the insurer could gain control of the repairs and leave your car in a substandard condition. 

  • Inherent Texas Diminished Value 
  • Inherent diminished value is considered to be the most common form of the practice, as it helps to ensure that your vehicle has been repaired to the best possible standard and is usually defined by the amount the resale value has been reduced due to the initial accident. 

    How To Calculate Diminished Value 

    If your vehicle has been damaged in an auto accident, then you can seek professional help to calculate your diminished value. However, it is also possible to calculate the value yourself using a diminished value calculator. 

    In most instances, diminished value is calculated by the extent of the damage your vehicle has suffered, as well as the cost of repairs, the repair quality, the cost of similar vehicles involved in collisions and current market trends. 

    For an accurate calculation, we recommend that you visit a car accident attorney, as they will be able to provide a more professional evaluation of your car. 

    What Factors Impact Diminished Value? 

    There are several factors that could impact the diminished value of your vehicle, with the most common being: 

    • The vehicle’s age 
    • The vehicle’s mileage 
    • The vehicle’s make and model 
    • The vehicle’s accident history 

    How Does The 17c Formula Work? 

    When insurers calculate your car’s diminished value, they will commonly use a method known as the 17c formula to achieve an accurate reading. 

    However, this does not mean that this method is the most reliable, as it comes with various limitations that could decrease the car’s diminished value and actual worth. 

    Here are the factors that are used to determine the diminished value using the 17c formula: 

    • The value of your car
    • Calculate the base loss of value by multiplying the cost by 10% 
    • Use a damage multiplier 
    • Use a mileage multiplier 
    Person Driving Car

    How To Submit Diminished Value 

    If you have been injured in an auto accident, you will need to file a personal injury claim, which also comes with the option of filing for diminished value. To make sure that your claim is approved, you will need to provide evidence that your car has lost value due to an accident and that your insurance policy covers diminished value. 

    During this process, we recommend that you keep all paperwork and estimates associated with your diminished value claim, as these could come in useful when speaking with your lawyer or insurance company. 

    When the at-fault party’s insurance company receives word of the claim, they will usually attempt to negotiate a final amount of compensation, which could result in the diminished value being included in the settlement with other losses. 

    Frequently Asked Questions 

  • Is Texas A Diminished Value State? 
  • The short and simple answer to this question is yes, Texas is a diminished value state, which means the legal practice is commonly acknowledged by the state and its laws.

     If you are a Texas resident and find yourself in an auto accident, then you could file for diminished value, as long as you are innocent and can provide the necessary evidence and paperwork. 

  • How Do You Calculate Diminished Value In Texas? 
  • In most instances, your insurer will use the 17c formula to determine an accurate evaluation of your car. 

    However, it is also important to note that the diminished value of your vehicle can also be influenced by the car’s age, make, mileage and accident history. 

  • Can You Sue Insurance For Diminished Value? 
  • If you are in an auto accident that is wholly attributable to the other party, then you can sue the insurance company of the at-fault party for diminished value. 

    However, if you have your own collision coverage, then your own insurance company will not pay for the diminished value claim. 

    Final Thoughts 

    And there we have it, that is everything you need to know about diminished value. We hope that you found this article helpful and that you will refer to it the next time you want to file a diminished value claim. 

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    6100 Bandera Rd #850, San Antonio, TX 78238

    (210) 873-8466

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