Texas is a diminished value state, meaning that diminished value claims are one option available to car owners who’ve lost value due to an accident. Here’s how they work in the Lone Star State and how to file one yourself.

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What is a diminished value claim?

When you get in a car accident in Texas and you’re less than 50% at fault, you can file a claim with the at-fault driver’s insurance company for hospital bills and repair costs. The Texas Department of Insurance requires all drivers to carry at least $30,000 per person / $60,000 per accident of

bodily injury liability coverage

and at least $25,000 of

property damage liability

per accident.

But even if you’re able to get your repairs covered, your vehicle will be worth less after any accident—period. The difference between the resale value of your vehicle before the accident and its remaining value after the dust settles is known as diminished value, and Texas law allows owners to submit claims for diminished value after an accident.

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Diminished value claims, explained

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The three types of diminished value

There are actually three different types of diminished value in Texas:

Repair-related diminished value: Applies when the diminished value of your vehicle is due to faulty repairs

Immediate diminished value: Applies if you haven’t made any repairs to your vehicle

Inherent diminished value: Applies when you’ve made repairs to the vehicle but still have a loss of value

In general, when people talk about “diminished value” in Texas, they’re really talking about inherent diminished value. For the purposes of this guide, that’s what we mean unless otherwise specified.

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What is the difference between diminished value and depreciation?

All cars depreciate—but not all cars get into accidents. While depreciation is the inevitable result of use and the passage of time, diminished value represents a much sharper drop in your vehicle’s value as a result of an accident. That’s because, even with repairs, car accidents tend to leave vehicles a little less sturdy than they were before.

Look at it this way: if you’re shopping for used cars, you’ll be more interested in a 2013

Toyota Camry

with 100,000 miles and no accidents than a 2013 Toyota Camry with 100,000 miles and two accidents. Same car, same mileage—but the second vehicle’s accident history means it’s worth less.

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What is the difference between a diminished value claim and a diminished value appraisal?

A diminished value appraisal is the first step to filing a diminished value claim with an insurance company. In order to file a successful claim, you’ll need to prove that your vehicle has lost value—and you need to be able to put a dollar amount on that loss of value.

You can make some of your own calculations using Kelley Blue Book’s market value estimates, but it’s usually best to get a professional appraisal from a used car dealer or another expert.

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How to file a Texas diminished value claim

Filing a diminished value claim in Texas isn’t very different from filing any other type of insurance claim—but it’s important to do your legwork before you contact your insurer.

First, make sure that you’re eligible to file a claim. In Texas, you can only file a diminished value claim if:

You were not at fault in the accident

You own your vehicle (i.e. not leasing or financing)

Your vehicle has no prior accidents

The at-fault party cannot cover the diminished value through property damage liability insurance

You can assign a dollar amount to the diminished value of your car

If you’ve met those requirements, you may be able to make a successful third-party diminished value claim with the at-fault driver’s insurance provider, but it will be up to the insurance company to make the final call.

To make a diminished value claim, you must:

Prove that your vehicle lost value. You can estimate the diminished value yourself using the free formula below, but it’s better to get as much professional documentation as possible. Bring your vehicle to a used car dealer or another diminished value expert, and get multiple repair quotes from mechanics if possible.

Submit your claim. If your insurance policy includes property damage coverage such as

collision coverage

, you can technically submit a first-party claim with your own insurance, but it’s usually better to submit a claim with the other driver’s insurer.

Wait. Insurance companies won’t always approve diminished value claims, so you’ll have to wait and see what the insurance adjuster decides.

Even if you follow those steps, your claim could still be denied. If that happens, you can reach out to a personal injury attorney or car accident lawyer to start a lawsuit in small claims court—but you’ll have to make a serious decision about whether it’s worth the effort.

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The 17c formula: free diminished value calculator

The formula that most experts use to calculate a vehicle’s diminished value after an auto accident is known as the 17c formula. While it’s not an exact formula—and you should always get an expert appraisal before submitting a diminished value claim—it can help you estimate the lost value of your vehicle to decide whether it’s worth pursuing a claim.

Start the formula by looking up the pre-accident value of the vehicle based on its make, model, age, mileage, and condition. Kelley Blue Book is a great resource for this. Next, multiply the car’s value by .10 (or 10%) to find the base loss value.

Once you have the base loss value, you’ll need to apply two separate multipliers to account for your vehicle’s damage and mileage. For damage, use the following multipliers:

1 if the car has structural damage

0.75 if the car has major panel or structural damage

0.5 if the car has moderate panel or structural damage

0.25 if the car has minor panel or structural damage

0 if the car has no structural damage

Take the resulting number and multiply it by one of the following numbers:

1 if your mileage is between 0 and 19,999

0.80 if your mileage is between 20,000 and 39,999

0.60 if your mileage is between 40,000 and 59,999

0.40 if your mileage is between 60,000 and 79,999

0.20 if your mileage is between 80,000 and 99,999

0 if your mileage is above 100,000

What is the statute of limitations for a diminished value claim in Texas?

In the state of Texas, drivers have two years to file a diminished value claim following an accident. If you attempt to file a claim after that point, you can expect to have it rejected.

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How long do you have to file a claim?

The bottom line

Texas allows diminished value claims—but that’s not a guarantee you’ll be able to successfully file one. Insurance companies are often reluctant to approve these claims. Drivers with rare or high-end vehicles who get a professional appraisal before submitting a claim tend to have the best luck.

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