What Is The Average Settlement Amount For Diminished Value?

diminished value compensation payout

If you are looking for the average diminished value settlement, then this is the perfect place for you.

If your car has been hit in an accident, even though it wasn’t your fault, it can have a negative effect on its value. This can be true of your car even if it has been repaired and does not show any signs of damage. This fall or depreciation in its value is called diminished value.

It’s important to understand the diminished value if you want to sell your car or refinance it, or even if you’re keen to file a claim for diminished value with an insurance agency because the fault was entirely the other driver’s.

Generally, diminished value is best calculated using the 17c formula. Insurance providers usually use this method but bear in mind that there are other ways of calculating diminished value too.

Calculating Your Car’s Diminished Value

The most popular way of determining your car’s diminished value is given below:

  1. Calculate Your Car’s Value Before The Accident

For this, you will have to use either the NADA online calculator or the Kelley Blue Book. Fill out your car’s details into the calculator and quickly get an estimate on its value.

  1. Add On A 10% Cap To Its Value

Insurance companies usually add a standard 10% cap as the maximum amount of value that any car owner could lose.

  1. Find Out The Extent Of Damage With A Damage Multiplier

Typically, an insurance company assesses the damage to a car and applies a number ranging from zero to one that shows the severity of damage to the vehicle. This is how it looks:

1.00 = Severe structural damage

0.75 = Major damage to structure and panels

0.50 = Medium damage to structure and panels

0.25 = Minor damage to structure and panels

0.00 = No structural damage or replaced panels

The number most applicable in the case of your car is then multiplied by the 10% cap.

  1. To This Is Added A Mileage Multiplier

To get a better idea of your car’s value, it is adjusted to show its mileage. Check out this table of values:

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+

To apply the above table, if your car has done 25,000 miles, multiply your adjusted value for damages by the corresponding 0.8.

Now let’s take an example to determine your car’s diminished value:

Assume that you were driving your car and a car from the opposite side hit and damaged your car. If before the accident your car was worth $13,000 and you had driven 25,000 miles on it, the calculation of diminished value would be:

10% x $13,000 = $1,300. This is the maximum amount you can lose in your car after repairs.

If your car damage is rated at 0.50, multiply $1,300 x 0.50 = $650.

With the 17c calculation method, multiply $650 x 0.80 to get $520. This is the decrease in the value of your car. So, the new value of your car stands at $13,000 – $520 = $12,480.

Therefore, $12,480 is the adjusted car value.


It’s important to use the 17c formula to determine the post-accident value of your car because this is what most car insurance companies go by. Besides, you have a good idea of your car’s latest worth, so in case you sell your car, you know how much to ask for.

Post Author: bengrammerlaw

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