What Is A “Diminished Value Claim” and Is It Worth Pursuing?

woman in dress holding sword figurine

You’ve finally repaired your car to its optimal condition after that nasty accident. If you didn’t know any better, you’d think the car hasn’t gotten into an accident at all. And yet, your freshly rehabbed vehicle retains that new accident smell with just a touch of mild trauma. No one would blame you for wanting to sell your once perfect car for a newer, purer one. But there is something you should be aware of: diminished value.

“What in the heck is ‘diminished value’ and why am I anxious about it?” you may ask. First, chill out. Second, “diminished value” is the difference between what the car was worth pre-accident and post-accident. You know that stank you recognize in your own post-accident car? Everyone else recognizes it too and it means your car is immediately less valuable.

It’s a total bummer, but think about it: Would you pay full price for a car if you knew it had been in an accident? Right, you wouldn’t. That said, if you were to ask a Chicago car accident attorney, they would share with you that you can file a claim for that diminished value. See? Not all is lost.

How Do You Calculate Diminished Value and File a Claim?

As is with most actions to take after an accident, the sooner you make a diminished value claim, the better. Besides, the longer you take to calculate the value, the more it depreciates. The way that insurers calculate is through a formula called 17c.

Fun fact: the name 17c is derived from the location of the formula in a case called Mabry vs. State Farm, a Georgia case where plaintiffs sued State Farm for failing to award them for diminished value. Through that case, a specific formula was developed to estimate what the diminished value would be on a car after an accident.

The formula is as such: Multiply the value of the car by 10% to determine the maximum amount an insurer will pay out (10% is fairly standard). Then multiply that by a “damage multiplier” and then multiply that result by a “mileage multiplier” and – boom – you’ve got your diminished value amount.

Let’s say your car is valued by the National Automobile Dealer’s Association (NADA) as a nice, clean $20,000. Multiplied by 10%, your result is $2,000. The features the NADA uses to determine the value are things like year, make, model, color, condition, engine, mileage, wheel type, trim, etc.

(You may have noticed that mileage is included as a factor in that determination, but we have another multiplier based on mileage coming up. That is correct: mileage is technically factored in twice.)

You then multiply that $2,000 by a damage multiplier. The scale used is from 0.00 (no structural damage or replaced panels) to 1.00 (severe structural damage). Since you’re already starting with the maximum you can recover, multiplying it by 1.00 would mean you’re sticking with the maximum; your damage is as bad as it can be. Let’s say your car is a 0.75 for major damage to structure and panels. $2,000 x 0.75 is $1,500.

Next, you multiply by a mileage multiplier. The scale is the same as the damage calculator but sort of in reverse. It’s from 1.00 (0-19,999 miles) to 0.00 (100,000 miles or more). With this multiplier, a brand-new car is in good condition and suffers the most harm from a crash. Contrast this with an old car where the high mileage is blamed for the low value instead of the damage. Let’s say your mileage is 61,000 miles for a multiplier of 0.40 (61,000-79,999). $1,500 x 0.40 is $600.

After all that math, your final diminished value is a cool $600. That’s nothing to sneeze at, these days.

How to Prove Diminished Value in Illinois

Each state has its own way of calculating diminished value and not every state allows this kind of claim. Thankfully, Illinois is one of the cool states that allows you to make a diminished value claim.

The statute of limitations in Illinois is five years. However, as discussed above, the sooner you file the better. It only gets more irritating to calculate the value as time goes on.

It’s your responsibility to determine how much your diminished value is and prove that loss via the 17c formula. A Chicago car accident attorney can help you here. Then, you’ll file the claim with your insurance company or a third party. Illinois insurance rules set the property damage minimum coverage up to $20,000.

After all that work with your attorney, you buckle up and get ready to negotiate a settlement. From there it’s just a matter of having all of your documents in line, having your car’s value determined by reputable appraisers (note that Kelley Blue Book will likely have different values than NADA, and NADA tends to be relied on more for matters of diminished value), and having a solid attorney by your side. If all those ducks are in a row, the success of your diminished value claim is that much more likely.

Was it worth reading? Let us know.