When a car accident happens, an insurance policy may help you recover the cost of the repairs and damages.

However, sometimes, the damages may be beyond the recovery amount. In such
situations, the car accident becomes the cause of your vehicle losing its resale value. In such cases, you can file a diminished value claim to recover some of the car’s depreciated value.

Now that we are clear on what is diminished value claim, here is a close look at points to remember when you are claiming one:

1. Who is at fault?

The first step to getting your claim is determining who has been at fault. In other words, take pictures, and find out the details of the other car and driver who caused the accident.

2. What are the state laws?

Every state follows a procedure for claiming diminished value claim. You can find this information on your state’s government website and find the Division of Insurance for information.

Else you can type “diminished value claim (followed by state name) in the search engine, and you shall get all the information.

3. What are the insurer rules?

Call up the driver’s insurance company and ask for the process the company follows. In other words, ask the insurance company for the documents or details that you need to file to claim the amount.

4. Collate the documents:

Now that you know how the state law works and what the faulty driver’s insurance company needs, the next step in the claiming process is to collate all the required documents in the format asked.

5. Calculate your car’s diminished value:

After collating all the documents, comes the critical aspect of evaluating your car’s diminished value.

You can do this yourself or hire a professional appraiser for the same.

If you plan to do it yourself, then here is a simple 3 step process to calculate the diminished value of your car :

1. First, find out your car’s market value. You can use online tools like Kelley Blue Book for the same.
2. Apply a 10% cap to the value.
3. Apply a damage multiplier to this cap amount.
4. Apply a mileage multiplier. A mileage multiplier is calculated on the kilometers you have driven.

Let’s give this equation a number for easy understanding:
a. Vehicle value: $10,000
b. Base loss of value: $10,000 x 10% = $1,000
c. Damage multiplier: $1,000 x 0.75 = $750
d. Mileage multiplier: $750 x 0.40 = $300
e. Diminished value: $300

For this particular vehicle, the diminished value would be $300 based on the above factors.

6. File the claim:

Once the value is determined, file the claim with the insurance company and be available to answer any questions. Typically, these kinds of claims take weeks or months to get settled. So be patient and be in touch with the driver’s insurance company.