# How to Calculate Diminished Value After an Accident

When you have a car accident in which the other party is at fault, you may be entitled to compensation for the decline in value of your vehicle. To calculate the diminished value, most insurance companies use a standard calculation called the 17-cent diminished value formula. This formula was first used in a Georgia claims case involving State Farm and its name derives from the place where it appeared in the court records in this case (paragraph 17, section c.).The formula is relatively simple and involves three steps. First, you must take the value of your vehicle and multiply it by a maximum limit of 10%.

Next, you would apply a damage-based damage multiplier to your car and a mileage multiplier based on your mileage. Finally, you would apply the base value loss to the sales value estimated by NADA or Kelley Blue Book. Insurers usually apply this 10% limit, and it's the maximum amount you can expect the insurance company to pay on your claim. It's important to note that you should use websites other than NADA to supplement the fair market value of your vehicle. Websites such as Kelley Blue Book may present different results than NADA.

In addition, use a third party to obtain a physical inspection of the damage to your vehicle. A third-party damage assessment can be used to negotiate according to the third step of Formula 17c. Once you've calculated the value of your vehicle, you'll need to file a reduced value claim against the insurance company of the person who was at fault for the accident if you can show that the resulting damage reduced the value of your car. The requirements for filing a reduced value claim vary by state, but even if you can file one, the insurer may not be required to pay. However, there are times when your insurance company may pay for the decrease in value of your vehicle after an accident. We will review your claim, make a preliminary estimate of the diminished value and provide you with your estimated diminished value. If, after calculating the decline in value of your car both ways, there is a big discrepancy between the numbers, you may be in a position to negotiate a better deal.

Be prepared to go to small claims court if the at-fault party's insurance company refuses to accept your reduced value claim. Understanding how insurers calculate the decrease in value will help you negotiate optimal compensation. Buyers will be able to view their car's history of repairs and accidents, as well as the decline in the value of their car. You have a lot at stake, and you are entitled to fair and swift compensation for the declining value of your car.

##### Darrell Trimboli

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