Find out how much your car is worth now if you’re looking to refinance or sell your car.
If your car’s been in an accident, it can negatively affect its value — even if your car’s been repaired and shows no signs of damage. This depreciation in your car’s worth is called diminished value.
Diminished value is important to understand if you want to refinance or sell your car, or if you want to file a diminished value claim with an insurance agency because of an accident where the other driver is at fault.
The most widely accepted method for calculating diminished value is the 17c formula. Most insurance providers favor this method, but keep in mind that it’s not universal.
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Calculating diminished value with the 17c formula
1. Determine your car’s value pre-accident. The easiest way to do this is to use either the Kelley Blue Book or NADA online calculator. Enter your car’s information into the calculator to get an estimate on the value of your car.
2. Apply a 10% cap. Ten percent is an arbitrary number that insurance companies use as the greatest amount of value that can be lost.
3. Apply a damage multiplier. The insurance company will assess the damage to your car and apply a number from zero to one indicating the severity of the damage.
- 1.00 = Severe structural damage
- 0.75 = Major damage to structure and panels
- 0.50 = Moderate damage to structure and panels
- 0.25 = Minor damage to structure and panels
- 0.00 = No structural damage or replaced panels
This number is multiplied by the 10% cap.
4. Apply a mileage multiplier. Your car’s value is further adjusted to reflect the car’s mileage.
- 1.0 = 0–19,999 miles
- 0.8 = 20,000–39,999 miles
- 0.6 = 40,000–59,999 miles
- 0.4 = 60,000–79,999 miles
- 0.2 = 80,000–99.999 miles
- 0.0 = 100,000+
For example, if your car has 25,000 miles on it, you’ll multiply your adjusted value for damages by 0.8.
Toyota Camry
You drove your Toyota Camry to the grocery store, and another driver hit and damaged your car door in the parking lot.
Let’s say your car was worth $13,000 before the accident, with 25,000 miles driven.
10% of $13,000 is $1,300. This means the maximum amount your car can lose in value after being repaired is $1,300.
If the damage to your car is assessed at 0.50, you would multiply $1,300 (the 10% cap) by 0.50 (the damage multiplier) to get $650.
Using the the 17c method, your car has decreased in value by $520. The new value of your car is $12,480.
$13,000 (original value)
$13,000 x 0.1 = $1,300 (maximum loss in value)
$1,300 x 0.5 = $650 (accident damage)
$650 x 0.8 = $520 (adjusted for mileage)
$13,000 – $520 = $12,480 (final adjusted car value)
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Bottom line
Not all insurance companies will use the same calculations to arrive at the diminished value of your car post-accident, but using the 17c formula will give a good starting point so you’re armed with the knowledge you need. Know how much your car is worth so you’re prepared for selling your car or comparing how much car insurance you need.
How long do you have to put a claim for depreciation?
Hi Wierzbicki,
Thanks for getting in touch with finder. I hope all is well with you. :)
This depends on your the terms and conditions of your policy. The state where you are living may also affect how long you can wait before you can put a claim – typically between 1 and 6 years. Your time limit may also depend on the extent of damage or depreciation. It would be a good idea to directly get in touch with your insurer to learn more.
You may also want to read this guide: How long after a car accident can you file a claim?
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua