How Is Diminished Value Calculated? - Let's Find Out in Detail
Oct 5, 2025
If your car has been in an accident, even after a perfect repair, it loses part of its resale value. This loss is called diminished value.
But how exactly is diminished value calculated? Understanding this helps you know how much money you might be entitled to claim from your insurance company.
In this guide, we’ll break down the formula, types, and factors that determine diminished value and how professionals like My Fair Claim calculate it accurately for fair compensation.
What Is Diminished Value?
Diminished value is the difference between your vehicle’s market value before an accident and its value after repairs.
Even if the repairs restore your car to its original look and function, buyers and dealers often pay less for a previously damaged car.
Example:
If your car was worth $25,000 before the accident and $20,000 after repairs, the diminished value is $5,000.
Types of Diminished Value
There are three main types of diminished value, and each can affect your claim differently.
1. Immediate Diminished Value:
The loss in value right after the accident, before any repairs are done.
2. Inherent Diminished Value:
The most common type is the loss in resale value after proper repairs because the car now has an accident history.
3. Repair-Related Diminished Value:
When poor-quality repairs or non-original parts reduce the vehicle’s worth even further.
The Standard Diminished Value Formula (17c Formula)
Most insurance companies use the 17c formula, originally developed by State Farm, as a baseline for calculating diminished value. While it’s not perfect, it provides a general estimate.
Here Is How You Can Calculate Diminished Value
Step 1: Find the vehicle’s pre-accident market value
Use trusted sources like Kelley Blue Book (KBB), Edmunds, or NADA Guides to find your car’s current market value.
Step 2: Apply a 10 percent base cap
Multiply the market value by 10 percent.
Example: If the car’s market value is $25,000, → $25,000 × 10 percent = $2,500.
Step 3: Apply a damage multiplier
Based on the severity of the structural damage
Severe structural damage – 1.00
Major damage – 0.75
Moderate damage – 0.50
Minor damage – 0.25
No structural damage – 0.00
Example: $2,500 × 0.50 (moderate damage) = $1,250.
Step 4: Apply a mileage multiplier
Based on your car’s mileage
0–19,999 miles → 1.00
20,000–39,999 → 0.80
40,000–59,999 → 0.60
60,000–79,999 → 0.40
80,000–99,999 → 0.20
100,000+ → 0.00
Example: $1,250 × 0.80 = $1,000 diminished value.
So, the estimated diminished value is $1,000.
Why the 17c Formula Isn’t Always Accurate
While the 17c formula gives a general idea, it often undervalues the true diminished value of your car because
It caps the loss at only 10 percent of the car’s value, which may not reflect real-world market conditions
It doesn’t consider local market trends or brand-specific depreciation
It assumes all repairs were done perfectly, which isn’t always the case
That’s why professional appraisers like My Fair Claim use advanced methods, real market comparables, and verified sales data to determine your car’s true post-repair value.
What Are the Factors that Influence Diminished Value?
Several factors affect how much your car’s value drops after an accident
Vehicle make and model – Luxury and newer vehicles lose more value
Severity of damage – Structural or frame damage significantly impacts resale value
Repair quality – OEM parts and certified repairs help reduce diminished value
Accident history reports – A Carfax or AutoCheck entry can reduce buyer confidence
Market demand – Some models hold value better in certain regions
Mileage and condition – Higher mileage means less value loss, since depreciation is already high
Professional Diminished Value Appraisal
To maximize your claim, you need a certified diminished value appraisal from a reputable firm.
My Fair Claim specializes in independent, data-backed appraisals that reflect true market loss, not just insurer estimates.
Our appraisers
Use real-world sales data and local market analysis
Provide USPAP-compliant appraisal reports
Help you negotiate fair compensation with the insurance company
Why You Shouldn’t Rely on Insurance Company Estimates
Insurance companies often use internal calculators that undervalue claims. Their goal is to minimize payouts, not to ensure your car’s resale value is protected.
By getting an independent appraisal, you have credible documentation to support your diminished value claim and demand a fair settlement.
Key Takeaways
Diminished value is more than a simple number. It’s the hidden financial loss most car owners overlook after an accident.
Understanding how diminished value is calculated helps you claim what you truly deserve.
With My Fair Claim, you can ensure your post-accident loss is professionally appraised, accurately documented, and fairly compensated.