Independent Appraisal Guide

The Industry Leader in Diminished Value Reports

Did My Car Lose Value?

It’s very, very likely.

You’re probably reading this because your vehicle has recently been damaged in an accident, and you want to know whether it lost value as a result. The answer? It’s very, very likely.

The real question isn’t whether your vehicle lost value. The mere fact that your vehicle was in an accident will cause your vehicle to suffer a drop in value. A potential buyer will never jump for joy at learning that the vehicle they’re considering buying has been in an accident. Whether your vehicle is old or new, whether the damage was light or severe, the accident is a negative vehicle history event for this vehicle. So the real question is how much value did your vehicle lose.

In determining the value your vehicle lost, IAG considers numerous factors. We consider the nature of the accident. Was this accident severe or was it more moderate? Was there damage to the structure or suspension? Did air bags deploy?

IAG also consider the unique characteristics of your individual vehicle. What is the year, make, and model of your vehicle? What was the mileage at the time of the accident? What options does it have? What other information is there on the vehicle history report?

No diminished value report is accurate unless it is market driven, which is why IAG reports are based on the behavior of the used vehicle market. There is no such thing as a one size fits all diminished value calculation. Your individual vehicle must be considered in the context of the used vehicle market and an individualized determination must be made of how much value your vehicle lost in the real market.

So yes, there’s a very good chance that the wreck caused your vehicle to lose value. IAG is here to help answer the more important question of how much value was lost.

Frequently Asked Questions

All vehicles, at all times, have a fair market value. When something happens to a vehicle, its fair market value may be affected. Most broadly, diminished value refers to the decrease in the fair market value possessed by a vehicle due to an automobile collision or other incident (e.g. flood damage or hail damage).

It is generally agreed that there are three basic types of diminished value that an automobile can suffer:

  1. Gross Diminished Value represents the total difference between the fair market value possessed by the vehicle immediately before the accident and the fair market value possessed by the unrepaired vehicle immediately after the accident.
  2. Repair-related Diminished Value represents the decrease in fair market value experienced by a vehicle due to incomplete, incompetent, or impossible repairs. For example, if the repair shop replaces an original equipment manufacturer (OEM) part with an incorrect or substandard non-OEM part, then your vehicle may suffer a decrease in value. Or if an insurer refused to pay for a necessary repair (e.g. paint tint and blending), then your vehicle may suffer a decrease in value due to the mismatching paint.
  3. Inherent (Residual) Diminished Value represents the decrease in fair market value experienced by a repaired vehicle due to the vehicle now possessing an accident history of prior collision damage. Even though the vehicle was repaired, the repaired vehicle’s newly-acquired accident history may affect the vehicle’s value. When most people talk about diminished value, they are talking about inherent diminished value.

There is a possibility of diminished value in any accident. Don’t assume that just because your vehicle was repaired that it did not suffer some loss in value. You may discover when you try to sell or trade-in your vehicle that a buyer is unwilling to pay the same amount of money for your repaired vehicle that he or she would have paid had your vehicle never been in an accident.

Also check out: Five Myths about Diminished Value

Despite how they may portray themselves in their own commercials, insurance companies are not your friends. They may not have your best interests at heart. Remember, the less money an insurer pays out on claims, the more money the insurance company retains as profits.

Also check out: The 17C Formula

You may be getting “low-balled” by the insurance company. The only way to be sure you have received an accurate calculation of your diminished value is to rely upon a professional, experienced appraisal service. Independent Appraisal Guide can accurately assess the amount, if any, of diminished value suffered by your vehicle.

Five Myths about Diminished Value

There is a tremendous amount of misinformation surrounding diminished value. These rumors, myths, and simply incorrect facts have been sent into the world by insurance companies, defense attorneys, and other parties interested in sowing confusion regarding diminished value. Here are five of the most popular diminished value myths and why they are wrong.

Myth 1: “Diminished value doesn’t occur if the vehicle has been repaired.”

Truth: Vehicles that have been involved in accidents and then are repaired may still lose value. Repairs can restore a vehicle’s function and appearance, but no amount of repairs can fix a vehicle history. A vehicle that has been in an accident is still a previously wrecked vehicle even after repairs. If buyers don’t care that a vehicle has been in an accident so long as it was repaired, then why would they obtain vehicle history reports to check a vehicle’s accident history? The reason vehicle history reporting agencies exist in the first place is because consumers do care about a vehicle’s accident history.

Myth 2: “A vehicle that is 7 years old, or that has over 100,000 miles on it suffers no diminished value after an accident”

Truth: Vehicles over 7 years old and/or with over 100,000 miles can suffer significant diminished value after an accident. Modern vehicles are driving further than ever before and are retaining their values better than ever. There are thousands upon of vehicles over 7 years old or with over 100,000 miles on them for sale at any given moment. Vehicles still have substantial value even after they pass 7 years or 100,000 miles. Anything with value can lose value if it is damaged.

Myth 3: “Diminished value cannot be determined unless you sell your vehicle”

Truth: This myth is patently untrue. A dealer has to know how to price a used vehicle before it is put on the lot. An insurance adjuster has to be able to calculate the value of a vehicle that was destroyed. An IRS agent has to be able to calculate the value of a vehicle won on an gameshow. None of these individuals have an actual sales price on which to base a value; however, none of them are drawing a number out of a hat eirther. They are making a determination of value without a sale. If the value of a vehicle can be determined without a sale, then the value of a vehicle after repairs can be determined.

Myth 4: “Diminished value only occurs when a vehicle suffers frame damage”

Truth: Frame damage may certainly cause your vehicle to lose value (sometimes a lot of value), but it is not necessary for a vehicle to lose value. A vehicle in a minor accident gains an accident history and still becomes a previously wrecked vehicle. When given the choice, buyers choose vehicles with pristine histories over similar vehicles with accident histories. Frame damage greatly magnifies the diminished value, but it is not a pre-requisite for diminished value.

Myth 5: “Your vehicle isn’t worth enough to suffer diminished value”

Truth: Any vehicle with value can lose value. Vehicles with more value may suffer a greater loss in value than a less valuable vehicle with similar damage. However, there is no magic line of value where diminished value cuts off. Buyers looking to buy older, less valuable vehicles still prefer vehicles with clean histories over ones with accident histories.

The 17C Formula

The most common methodology we see insurance companies use to calculate diminished value is known as the 17C Formula. This simple formula provides consistent results. However, those results are consistently wrong. In the vast majority of instances, the 17C formula results in a finding of little to no diminished value. This is exactly what the formula was designed to do.

What is the 17C Formula?

The 17C formula begins by finding the value of your vehicle in a guidebook. The formula then takes 10% of that value as a starting point.

Next, the formula applies what it calls a “mileage modifier.” This is done by multiplying the 10% of your vehicle’s value by a number between 0.0 and 1.0.

The mileage modifier is based on a scale of 100,000 miles. A vehicle with 0 miles on it would get a 1.0 modifier, a vehicle with 50,000 miles on it would get a 0.5 modifier, and a vehicle with 100,000+ miles on it would get a 0.0 modifier.

If your vehicle has 100,000+ miles on it, the 10% of your vehicle’s value will be multiplied by 0.0 resulting in a figure of $0. Because of this, the 17C formula will always result in no diminished value for a vehicle with 100,000+ miles.

If your DV calculation has not already been zeroed out, the 17c formulathen applies a damage modifier to it. Like the mileage modifier, this is done by multiplying the result of the previous step by a number between 0.0 and 1.0. The modifier is chosen based on the severity of the accident with more severe accidents getting a higher number.

The result after this modifier is the formula’s end diminished value figure.

Problems with the 17C Formula

The 17C formula suffers from so many problems that all of them could never be listed here; however, we will address some of the major issues.

The first and most obvious is that no car buyer in history has ever relied upon the 17C formula when figuring out how much less they’d be willing to pay for a previously wrecked vehicle. DV is based on market behavior. How can this formula result in valid diminished value figures when it’s never used in the market?

Next, the 10% starting figure is completely arbitrary. There is no justification for starting at 10% of book value; except, that it is a nice, low number.

The modifiers numbers have issues as well. Why are the modifiers set between 0.0 and 1.0? Why not set them between 1.0 and 2.0? Or 1.0 and 5.0? Multiplying the figure by a number between 0.0 and 1.0 can never result in an increase in the figure. Any modifier less than the 1.0 maximum would only reduce the figure. Shouldn’t a low mileage vehicle suffer more diminished value, not less? Shouldn’t a severe accident cause more diminished value, not less?


When the 17C formula is closely examined and the problems with it are laid out, it is easy to see that the formula is designed to come up with small diminished value figures. The formula places a hard cap on diminished value at 10% of your vehicle’s value which the modifiers can never increase.

The harsh modifiers compound on one another to beat the figure down to the point that the result is patently insufficient. Only a fair analysis of your individual vehicle with a market driven approach can result in a true, accurate diminished value figure.


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