A car that has never been in an accident may be worth thousands more at resale than one that has been in an accident and repaired, even if the repaired car appears to be as good as new and runs better than ever. This is the reality of diminished value, whether repairs did not restore the car to its pre-accident condition, or simply because the car’s history is now tarnished.
How is Diminished Value Calculated?
Most insurance companies use a calculation known as “17c” to arrive at a monetary value for your car in post-accident condition. This formula was first used in a Georgia claims case and derives its name from where it appeared in the court records for this case – paragraph 17, section c. Although formula 17c was approved for use in that one particular claims case, it can be used to arrive at a relatively low value so the formula has been widely adopted as a standard by the insurance industry.
Because you will benefit more from a higher diminished value number, it is important to know both how the insurance company paying your claim will arrive at your car’s current value and its actual value if you were to sell it in its current condition. If, after calculating diminished value for your car in both methods, there is a large discrepancy between the numbers, you may be in a position to negotiate a better deal.
Here is how formula 17c works:
Here’s how to calculate actual diminished value:
If the diminished values determined by both methods are outrageously different, you will need to make your request to the insurance company responsible for reimbursing you for your car’s loss in value as a result of the accident. In most cases, it is the vehicle owner’s responsibility to prove their loss.