Is Diminished Value Covered in All Insurance Policies?

After a car accident, your vehicle may be repaired and look like new, but its market value often tells a different story. Even after professional repairs, your car may be worth less than it was before the accident. This difference is known as diminished value, and it can impact how much you receive if you sell or trade your vehicle. The question many drivers ask is whether diminished value is covered in all insurance policies.

Understanding your rights and how to pursue a diminished value appraisal can help you recover the full financial impact of your loss.

What Is Diminished Value?

Diminished value refers to the reduction in a vehicle’s market value after it has been involved in an accident and repaired. Even if the repairs are high quality, the fact that your vehicle has a prior accident history can affect what a buyer is willing to pay.

There are three main types of diminished value:

• Inherent diminished value – the loss in value simply because the car now has an accident history
• Repair-related diminished value – a loss in value due to poor or incomplete repairs
• Immediate diminished value – the difference in value before and immediately after an accident, before repairs

Does Your Insurance Cover Diminished Value?

The answer depends on several factors, including the type of insurance policy you have, who was at fault, and which state you live in.

In most cases:

• If you are at fault, your own insurance will not pay for diminished value unless you have special coverage
• If the other driver is at fault, you can often pursue a diminished value claim through their liability insurance
• Not all insurers disclose this right, so it is important to know your options and ask questions

Texas law allows third-party diminished value claims, which means if someone else is responsible for the accident, you may be entitled to compensation for the reduction in your vehicle’s value.

Why You Need a Diminished Value Appraisal

If you want to claim diminished value, you will need proof. That is where a professional diminished value appraisal comes in. This is a formal report prepared by a certified appraiser that documents how much value your car has lost due to the accident.

A proper appraisal includes:

• Detailed vehicle history
• Market comparisons with similar vehicles
• An assessment of the accident severity and repairs
• A fair estimate of post-repair market value

This report is often submitted to the at-fault party’s insurance company during the claims process to justify your request for compensation.

How to File a Diminished Value Claim

The claims process can vary by state and insurer, but these are the general steps:

Step 1: Request a Copy of the Insurance Policy

Start by asking the insurance company for a copy of the relevant policy to verify coverage.

Step 2: Obtain a Professional Appraisal

Contact a qualified auto appraiser to perform a diminished value appraisal on your vehicle.

Step 3: Submit Your Claim with Documentation

Include the appraisal, repair invoices, and a detailed letter explaining the claim.

Step 4: Follow Up and Negotiate

The insurer may counteroffer or dispute the amount. Your appraiser can help support your case with evidence.

Benefits of Pursuing Diminished Value

Even if your car drives just fine after a repair, the reduced value can cost you when it is time to sell or trade. A successful claim helps you recover that hidden loss.

Key benefits include:

• Financial recovery for the value lost after an accident
• Protection of long-term investment in your vehicle
• More accurate resale value documentation
• Support in trade-in negotiations

Many drivers are unaware that they can file these claims, and insurance companies are not always eager to share this information. Being informed puts you in control.

Work With Professionals Who Understand Diminished Value to Get the Full Value You Deserve

If you have been in an accident and suspect your vehicle has lost value, it is important to get expert help. A certified appraiser can provide the diminished value appraisal you need to build a strong case. 

At Northside Collision, we understand the details involved in post-accident diminished value appraisals in San Antonio, TX, and can guide you through the process with clarity and confidence.

Contact Northside Collision today to learn more about diminished value claims and schedule your professional appraisal.