5 Common Mistakes When Filing a Diminished Value Claim
Avoid these pitfalls that could cost you thousands of dollars in your final settlement. Learn what the insurance companies don't want you to know.
Mistake #1: Waiting Too Long to File
Every state has a statute of limitations for property damage claims, and diminished value falls under this category. In many states, you have as little as two to three years from the date of the accident to file your claim. However, the real danger of waiting is not just the legal deadline—it is the erosion of your evidence. The longer you wait, the harder it becomes to establish the vehicle's pre-accident condition, gather repair documentation, and demonstrate the loss in market value.
What to do instead: Begin the diminished value claim process as soon as your vehicle repairs are complete. The sooner you act, the stronger your documentation and the more credible your claim.
Mistake #2: Using the 17c Formula
The so-called "17c formula" originated from a State Farm internal claims-handling guideline and was never intended to be a universal standard for calculating diminished value. Despite this, many claimants—and even some adjusters—still rely on it. The formula caps diminished value at 10% of the vehicle's NADA retail value and then applies arbitrary multipliers based on damage severity and mileage, often resulting in a figure that is a fraction of the actual loss.
What to do instead: Obtain a professional appraisal that uses recognized, market-based methodologies. A certified appraiser will analyze comparable sales data and real market conditions to determine the true diminished value, which is almost always significantly higher than the 17c figure.
Mistake #3: Not Getting a Professional Appraisal
This is perhaps the most costly mistake of all. Many vehicle owners attempt to negotiate their diminished value claim armed with nothing more than a printout from an online calculator or a letter they drafted themselves. Insurance companies are sophisticated operations with teams of adjusters trained to minimize payouts. Without a professional, certified appraisal report, you are bringing a knife to a gunfight.
What to do instead: Invest in a professional appraisal from a certified, licensed appraiser. The cost of the report is typically a small fraction of the additional settlement it helps you recover. A professional report carries credibility that an online estimate simply cannot match.
Mistake #4: Accepting the First Offer
Insurance companies are in the business of paying as little as possible. Their first offer on a diminished value claim—if they make one at all—is almost always a lowball figure designed to test whether you will accept it without pushback. Many claimants, eager to close the chapter on their accident, accept this initial offer and leave thousands of dollars on the table.
What to do instead: Treat the first offer as a starting point for negotiation, not a final answer. Respond with your professional appraisal report and a clear, written demand for the full amount of diminished value. Be prepared for a back-and-forth process, and do not be afraid to escalate to the appraisal clause or small claims court if necessary.
Mistake #5: Filing Against the Wrong Party
Understanding the difference between first-party and third-party diminished value claims is critical, and filing against the wrong party can waste valuable time and resources. A third-party claim is filed against the at-fault driver's insurance company and is available in most states. A first-party claim is filed against your own insurance company and is only recognized in certain states, most notably Georgia following the State Farm v. Mabry ruling.
What to do instead: Before filing, research your state's specific laws regarding diminished value. Determine whether you have a first-party claim, a third-party claim, or both. If you were not at fault, your strongest path is typically a third-party claim against the other driver's insurer. Consult with a professional who understands the nuances of diminished value law in your state.
Summary: The Five Mistakes at a Glance
| Mistake | Consequence | Solution |
|---|---|---|
| Waiting too long | Evidence deteriorates; statute of limitations risk | File as soon as repairs are complete |
| Using the 17c formula | Drastically undervalues your claim | Get a market-based professional appraisal |
| No professional appraisal | Weak negotiating position | Invest in a certified appraisal report |
| Accepting the first offer | Leaving money on the table | Negotiate with evidence; escalate if needed |
| Filing against the wrong party | Wasted time; potential denial | Research your state's DV laws first |
Conclusion
Filing a diminished value claim is not something you should approach casually. The insurance company has professionals working on their side—you should have professionals working on yours. By avoiding these five common mistakes and arming yourself with a professional appraisal, you give yourself the best possible chance of recovering the full diminished value of your vehicle.