Diminished Value FAQs

Diminished Value FAQs

Diminished value seems to be one of the largest secrets of automobile insurance claims. There are many different definitions of diminished value, and the legal definition can differ depending on what state you live in.  Below are several different explanations/definitions that may help you in understanding what diminished value is:

  • A decrease in your automobile’s value due to your automobile obtaining an accident in it’s history.
  • An acceleration of your vehicle’s depreciation under the theory that an average person would not pay the same price for your vehicle with accident history that the average person would pay for your vehicle without the accident history.
  • The percentage of your wrecked automobile’s value that did not return after your automobile has been repaired (to auto repair industry standards).


The short answer in North Carolina is that if your vehicle has never been in a prior accident (not including the accident you are visiting us for), then you almost certainly have a diminished value claim.

We believe in Diminished Value Claims, and North Carolina Law allows for Diminished Value Claims.  We believe that a vehicle with a publicly available history of a significant repair will not fetch the same price in a sale as a vehicle without a publicly available history of a significant repair.  Our theory is that the average buyer would pay more for a vehicle that had no history of a significant repair if they were choosing between two identical vehicles except one vehicle has a history of a significant repair and one vehicle has no history of a significant repair.

If you ask some insurance companies, and some insurance defense attorneys, you may hear that if your vehicle is in the same physical condition it was in prior to the accident then you have suffered no loss in value.  They may tell you that it is essentially the exact same vehicle you had prior to the accident, and that you have suffered no financial loss.  Sometimes they will even say that a buyer of vehicles would not care if your vehicle has been through a significant repair, so long as the repair appears to be a quality repair.


Most insurance companies will not inform you that your vehicle has diminished in value, and will not pay you anything unless you present the insurance company with your diminished value claim.  Presenting a claim can be as simple as verbally telling the insurance company that you think your automobile has diminished in value, or may need to be more formal in the form of an appraisal from a vehicle appraiser.


You can certainly try, and some people do have success handling these diminished value claims on their own.  However, the more likely outcome is that you will spend never ending amounts of time gathering documentation requested by the insurance company only to have them tell you why it doesn’t prove your vehicle has lost value.  The insurance company will generally continue to offer you very little money, while you are running around paying for appraisals, getting trade in quotes, etc.  After all, what are you going to do about it, file a lawsuit?  Probably the biggest risk you run in handling your own diminished value claim is hiring the wrong appraiser (which is a waste of $200-$400).

The better option is to hire an attorney to handle this for you.  You’ll get what your case is worth (of course you’ll lose a percentage to the attorney, but we think we can get a lot more money on your claim then you can on your own).  Also, you’ll help ensure that the insurance company doesn’t get away with underpaying these diminished value claims or wrongfully denying these claims.


You do not need to sell your vehicle to get diminished value.  In fact, we would prefer you not sell your vehicle in the event we need to litigate your case (as your vehicle’s condition is required evidence in your trial).

The decrease in value in your vehicle happens as soon as it acquires the accident history (so immediately after your accident).  Selling your vehicle is only proof of the decrease in value, but there are other methods to prove the decrease in value (trade-in quotes, expert appraisals, etc.).


Under North Carolina law, fair market value is defined as “the amount which would be agreed upon as a fair price by an owner who wishes to sell, but is not compelled to do so, and a buyer who wishes to buy, but is not compelled to do so.”

As it relates to diminished value, the question is whether a buyer who is not compelled to buy a car would pay the same price for a car that has a history of an accident and a car that has no history of an accident?


No.  Your vehicle does not need to be 5 years or newer to have diminished value.  To have a diminished value claim you just have to prove that a buyer who is not compelled to buy a car would pay less for your vehicle than he/she would pay for a similar vehicle with no accident history.

The source of the myth that your vehicle must be 5 years or newer is the North Carolina Damage Disclosure Statute (N.C.G.S. 20-71.4) which states that it is a misdemeanor crime to sell a vehicle that is five model years old that has been involved in a collision with the damages exceeding twenty five percent (25%) without disclosing the damage in writing prior to the transfer.

That Damage Disclosure Statute (N.C.G.S. 20-71.4) is often an argument made for and against diminished value, but it is just a factor in your diminished value case.  It is not the only factor in your diminished value claim.


No.  Your vehicle does not need to be damaged in excess of twenty five percent (25%) of its vehicle’s fair market value to have diminished value.  To reiterate, you have a diminished value claim if you can prove to a jury, judge or adjuster that a buyer would pay less for your car than that same buyer would pay for a vehicle that is similar without accident history.


Kreger Law Firm’s Diminished Value Attorneys represent clients fighting criminal charges in Durham County, Guilford County (including the cities of Gibsonville, Greensboro, High Point, Jamestown, Oak Ridge, Pleasant Garden, Sedalia, Stokesdale, Summerfield and Whitsett) and Orange County (including the cities of Carrboro, Chapel Hill and Hillsborough). Thank you again for reaching out to our Diminished Value Lawyers at Kreger Law Firm Attorneys at Law. We look forward to hearing from you.