Maryland Diminished Value Accident Claims

Diminished value is calculated by determining a vehicle’s value before a collision and subtracting the vehicle’s value after the accident and repairs. The difference equals the vehicle’s diminished value. Insurance companies like GEICO, Allstate, and State Farm, rarely pay this value in property damage claims without a fight.

The problem is easy to understand. Your vehicle can be repaired and still not be restored to its pre-loss value. The minute a dealer looks at CarFax and sees the car has been wrecked, you are likely getting less for the vehicle. That lost value is the heart of a diminished value claim.

In many personal injury cases, victims get a sneak preview of how the insurance company will treat them in the property damage claim. Insurance companies do not settle serious accident claims, not typically, anyway, until far later down the road when the client has recovered or reached maximum medical improvement (the healing has come as far as it will).

Ripe Conditions for Insurance Companies to Take Advantage

Property damage claims are immediate, giving the victim the first glance of the extent to which the insurance company will completely jerk them around. Loss of value claims are tailor-made for insurance companies not to play it straight.

How Much Is My Car Worth After an Accident?

Theoretically, the law is precisely what it should be. Maryland law allows the victim to recover the cost of repairing the vehicle and, when it can be proven, the loss of value of the vehicle because of the accident, subject to the overall measure of damages. If the vehicle is a total loss, the measure is different because there is no repaired vehicle left to value.

The key word in a repairable vehicle case is “and.” A repaired vehicle may still have a reduced value due to its history of being in a crash. Under Maryland law, compensation for diminished value is based on the basic principle that the injured party should, insofar as possible, be restored to the position he or she occupied before the accident.

So this is simple. There are few tort claims you can solve with a calculator. But this is one of them. It is a simple calculation in theory.

The hard part is proving the numbers.

Maryland Diminished Value Law

Specifically, and we flesh this out below, the Maryland Court of Special Appeals found in 1971 that if a “plaintiff can prove that after repairs his vehicle has a diminished market value from being injured, then he can recover in addition to the cost of repairs the diminution in market value, provided the two together do not exceed the decrease in value before the repairs.”

That is the calculator to prove diminished value on a car, not 17c or KBB diminished value calculators many want to use. The lost value is the actual lost value, not some formula that projects diminution of value without considering the actual vehicle at issue.

Maryland plaintiffs can recover damages for the diminished value of property when the law and facts support the claim. In a car accident case, the claim ordinarily arises from the negligence of the driver who caused the collision.

Whose Insurance Company Are You Making the Claim Against?

There is an important distinction here that the old version of this page did not make clearly enough.

If another driver caused the accident, you are making a property damage claim against that driver’s liability insurance. That claim can include diminished value if you can prove it.

If you are asking your own insurance company to pay diminished value under collision coverage, the answer can be different. Collision coverage is contractual. Your policy may exclude or limit payment for diminished value. So you have to read the policy.

Uninsured motorist property damage coverage presents another issue. Maryland’s required uninsured motorist coverage can include proven diminution in value damages when an uninsured or underinsured driver caused the loss.

So you should not begin with the assumption that every insurance company owes diminished value in every situation. You first need to know whose carrier you are dealing with and what coverage applies.

Insurance Companies Blow Off Diminished Value Claims

Sounds great. The problem is that insurance companies, at least in Maryland, ignore diminished value claims. How? They routinely refuse to pay what claimants believe the vehicle actually lost in resale value.

Yes, Maryland law allows plaintiffs to bring a diminished value claim. But, practically, the insurance companies understand that most lawyers will not touch diminution of value claims unless they are connected to a severe injury claim. Our law firm is undoubtedly guilty of this.

So for most diminished value accident claims, no one is willing to hire an expert and file a lawsuit. So, unless you take them to the courthouse steps and beyond, these diminished value claims are unlikely to get paid at their full value.

This problem has become an even bigger deal with the rise of CarFax, which allows everyone to check a vehicle’s accident history quickly. This cuts down the market for potential buyers when you go to sell the car.

How to Beat the Insurance Company?

What is the answer? Well, if you have been seriously injured in an accident, your lawyer may be willing to push the ball on your diminished value claim.

If not, there are not a lot of great options. The best is not the one you want to hear: push the insurance company by filing suit on diminished value, let them know you know you need an expert and line one up, and then settle your claim for the best value you can get.

• Property damage claims: how they work and how you can put yourself in a position to get the best deal.
• Personal Injury Victims Help Center (information on everything you want to know about personal injury claims)
• Demand Letter to Insurance Company (template demand letter for compensation to the insurance company in personal injury, not property damage, case)

Is a Diminished Value Claim Worth It?

Whether a diminished value case is worth it depends on how unreasonable the insurance company is. The juice is not worth the squeeze if the insurance company is shorting you $100. But if there are thousands of dollars involved, that is a very different story.

A nearly new vehicle with low mileage, no accident history, and $20,000 in repairs is obviously a different case from a ten-year-old car with 160,000 miles and several previous accidents.

The age and mileage of the vehicle matter. The amount and nature of the damage matter. Prior accidents matter. The market for the particular vehicle matters. Whether there was structural damage matters. There is no honest formula that makes those facts irrelevant.

How Do I Make a Diminished Value Claim?

Making a diminished value claim is a bit tricky because it is rare that your case will justify retaining a lawyer, and it is unlikely a lawyer would take a diminished value claim on a contingency fee basis.

But you still need to prove the claim. “My car is worth less because it was wrecked” is probably true. It is not enough.

Get the complete repair estimate, including supplements. Keep the final repair invoice. Take pictures. Get the vehicle history report. Keep your purchase and service records. If the car had never been wrecked before, you want to be able to prove that too.

Then you need evidence of the value before the accident and after the repairs. A written dealer opinion can help. Comparable vehicles can help. For a significant claim, an independent diminished value appraisal is usually the best evidence.

For small value claims, most courts make it pretty easy to make a claim, and they relax rules of evidence and other legal technicalities that can make bringing a legal claim a challenge. In Maryland, bringing a small claims lawsuit for $5,000 or less is pretty straightforward.

What If the Insurance Company Uses a Diminished Value Formula?

The insurance company may use a formula. That does not make the formula the law.

A diminished value calculator can give you a number. So can the insurer’s computer. The real question is whether that number reflects the actual lost value of your vehicle.

If your appraiser says the vehicle lost $5,000 and the insurance company says its formula produces $900, ask what actual market evidence supports the $900.

The lost value is the actual lost value, not some formula that projects diminution of value without considering the actual vehicle at issue.

Does Insurance Pay for Diminished Value?

Some insurance companies pay diminished value claims more readily than others. Clearly, paying victims less is a path for insurance companies to make a great deal of money.

But the important legal question is what type of claim you have. A third-party claim against the driver who caused the crash is not the same thing as a first-party claim under your own collision policy.

If another driver caused the crash, Maryland law permits a properly proven claim for the remaining loss in the vehicle’s market value. If you are seeking payment under your own collision coverage, you need to look at the actual policy language.

What Is the Average Diminished Value Claim?

There are no real statistics that give an average diminished value settlement claim value. No calculator will give you an exact amount for your claim. The vehicle’s appraisal has some subjective elements, so any diminished value calculator you find online is likely to be of limited value.

This is one of those questions where an “average” is not very helpful anyway. The value of a diminished value claim is driven by the vehicle and the damage to that vehicle.

Can You File a Claim for Diminished Value?

As we discussed above, you can absolutely file a lawsuit for a diminished value claim. In Maryland, if you file a claim for $5,000 or less, it is much easier to get by without a lawyer than if the claim is more than $5,000. Why? Maryland relaxes rules of evidence and other administrative hurdles in small claims cases.

This is important because the economics are what make these claims so difficult. The insurance company knows you are probably not going to hire a lawyer to recover a few thousand dollars. Small claims court at least gives you a way to put the dispute in front of a judge without turning it into a full-scale civil war.

Do You Have to Sell the Car to Prove Diminished Value?

No. You do not have to sell the vehicle before you can claim that its market value has gone down.

Market value is proven all the time without an actual sale. You can use an appraisal, dealer valuations, comparable vehicles, auction information, and other evidence.

But actually trying to sell or trade the vehicle can give you useful evidence. If three dealers all reduce their trade-in offers because of the accident history, that tells you something very real about the diminished value.

Should You Wait Until the Repairs Are Complete?

Usually, yes.

If your claim is that the vehicle is worth less even after it has been properly repaired, you need to know what the vehicle looks like and what it is worth after those repairs are complete.

Do not forget the repair supplements. An initial estimate might be $8,000, and the final repair bill might be $17,000 after the body shop takes the vehicle apart and finds additional damage. Give the appraiser the complete repair history.

Common Insurance Company Arguments

The insurance company may tell you the car was completely repaired. That misses the point. A perfectly repaired vehicle can still be worth less because it now has an accident history.

The adjuster may tell you there is no loss because you have not sold the vehicle. Again, that is not how market value works.

You may be told the vehicle is too old to have a diminished value claim. Maybe the age and mileage make the claim small. But those are factors in calculating value. They are not a legal rule that automatically makes the loss zero.

You may also hear that your appraiser is wrong. Maybe the appraiser is wrong. Ask why. Make the insurance company show you the market evidence that supports its number.

Remember, adjusters handling property damage issues are rarely the most experienced adjusters. They will sometimes make utterly ridiculous arguments. Do not assume you are the one that does not get it.

Are Insurance Companies Required to Pay Diminished Value?

Maryland law permits recovery of diminished value when the claim is legally available, and the loss can be proven. The problem is that making an insurance company pay what you believe you are owed may require you to file a lawsuit.

That is especially true when the carrier knows the amount in controversy is too small to make hiring a lawyer economically practical.

How Long Do You Have to File a Maryland Diminished Value Lawsuit?

Maryland’s general limitations period for a civil claim is three years unless another limitations rule applies.

Do not assume the insurance company extends that deadline because an adjuster is still negotiating with you. If the deadline is approaching, you need to determine whether suit has to be filed to protect the claim.

Maryland Expert Witnesses for Diminished Value Claims in Maryland

A diminished value calculator that computes the exact value of the loss on the vehicle that a court could rely upon would make these claims a lot easier to manage. But there is no formula for these appraisals. The loss of value depends on the type of car, the type of collision, and a host of other facts.

Keep in mind that there is arguably a flaw in using a Blue Book calculation. Trade-in numbers can be affected by rebates, incentives, discounts, and the way a dealership structures the purchase of another vehicle.

This can make trade-in value a less pristine measure of actual fair market value than people assume. Be prepared for arguments about valuation with the insurance adjuster and, if necessary, at trial.

You may need an expert to bring a diminished value claim to appraise your vehicle and to calculate the inherent loss to the Plaintiff’s vehicle following the crash. This is the best way to prove a diminished value claim.

One company that currently provides this type of appraisal in Maryland is:

• Reed Auto Appraisers: 301-946-6116

*Note: Miller & Zois does not endorse this expert. We are merely passing along the name of an appraiser who may be able to provide evidence that your vehicle is diminished in value because of its repair history.

Lawsuit Language for Diminished Value Claim

COUNT II: DIMINISHED VALUE TO VEHICLE

1. Plaintiff incorporates the above-referenced paragraphs as if the same were fully set forth herein.
2. Defendant’s negligence caused substantial and extensive property damage to Plaintiff’s 2019 Honda Accord (“Plaintiff’s car”).
3. On the date of this collision, Plaintiff’s car had an odometer reading of 742 miles, and it had not been previously damaged.
4. The damage to Plaintiff’s car was repaired for $18,398.16 and took at least 45 days to repair.
5. As a result of Defendant’s negligence, the resale value of Plaintiff’s car has been significantly diminished because future buyers will know of the damage to the vehicle, and the price will reflect this car crash.
6. The car is brand new. There has been no prior damage.
7. Plaintiff has not been reimbursed for her vehicle’s diminished resale value loss.

WHEREFORE, Plaintiff demands judgment against Defendant for Thirty Thousand Dollars ($30,000.00) in compensatory damages, plus interest and costs.

Maryland Law on Diminished Value Claims

A diminished value claim is permitted in Maryland if the sum of the diminution in value plus the repair costs is less than the difference between the vehicle’s pre-accident value and its post-accident salvage value.

Accordingly, a Maryland plaintiff can claim the smaller of: (1) the sum of the repair costs plus any decrease in the value of that vehicle after the repairs and (2) the difference between the vehicle’s value before the car crash and its value after the accident before any repairs.

If you are taking one of these cases to trial, bring everything relevant to the value of the vehicle, including:

• the Blue Book value and evidence of the value of this vehicle in this jurisdiction
• recent sales or auction information involving the same or similar vehicle
• warranty information
• purchase records
• service records
• the complete repair estimate and all supplements
• photographs of the collision damage
• the vehicle history report
• dealer valuations
• the diminished value appraisal

Do not make the judge guess. Your job is to give the court evidence showing what the vehicle was worth before the crash and what it was worth after the repairs.

Diminished Value Law Around the Country

We have pulled some of the laws around the country on the issue of diminished value claims. As you will see, the results are mixed. You also have to distinguish between a claim against the person who caused the accident and a claim under your own insurance policy.

• Maryland: Fred Frederick Motors, Inc. v. Krause, 12 Md. App. 62 (1971) (This case is the primary source of Maryland’s diminished value law. Every car accident lawyer should know this case. Maryland’s intermediate appellate court held that the owner of a damaged car may recover any reduction of the vehicle’s value after the vehicle has been repaired as well as it reasonably can be repaired.)
• Maryland #2: Admiral Ins. Co. v. John Stromberg & Assoc., 77 Md. App. 726, 738, 551 A.2d 923 (1989). (For the definition of the word replace, “generally defined to mean the ‘restoring to a former condition,’ or ‘the providing of an equivalent for.’”)
• Maryland #3: Taylor v. King, 241 Md. 50 (1965). (Maryland’s rule on the measure of damages on vehicles that are not a total loss generally looks to the reasonable cost of necessary repairs when appropriate, subject to the overall diminution in market value caused by the injury.)
• Maryland #4: Berry v. Queen, 469 Md. 674 (2020). This case primarily addressed loss of use under Maryland uninsured motorist property damage coverage, but it is useful in understanding Maryland’s treatment of automobile property damages under required uninsured motorist coverage.
• Washington: Moeller v. Farmers Insurance (the automobile insurance policy at issue provided coverage for the diminished value of a fully repaired car because the court concluded that the policy covered the actual loss, including diminished value).
• Ohio: Rakich v. Anthem Blue Cross (recognized residual diminution in value where the loss did not overlap with compensation for the cost of repairs).
• Tennessee: Grimes v. Hancock (Tennessee takes a more restrictive view of separate residual diminution in value after a vehicle has been repaired).

Do not assume the Maryland rule applies in another state. Diminished value law varies, and the language of the insurance policy can also matter when you are making a claim against your own carrier.

More on Property Damage Claims

• Getting a Rental Car (overview of the rules and what you can do)
• Sample Expert Witness Diminished Value Report (sample report from an expert showing the factors that go into a diminished value property damage claim)
• Kelley Blue Book (one source for determining vehicle value)
• Property Damages Release (signing the wrong release can be fatal to your property damage claim)

Dealing with the Insurance Company

• How Long Should It Take to Settle My Case? (information on how long a personal injury claim, as opposed to a property damage claim, will take to settle)
• 8 Mistakes Car Accident Victims Make in Settling Their Own Case (what the insurance companies do to take advantage of people to settle claims for less than they are worth)
• An example of how insurance companies confuse victims with the law and what and how much they are entitled to recover
• What Happens in an Accident Case? (looking at the case from the client’s perspective from beginning to end)
• Handling Your Injury Case Without a Lawyer (tips and strategies)
• What Is the Value of Your Accident Case? (article on how value is placed on the pain and suffering component of personal injury claims)

Will Our Lawyers Handle a Diminished Value Claim?

Our accident lawyers have successfully settled thousands of cases for clients injured in automobile accidents. But we handle only serious injury car accident claims. We generally do not handle property damage only or minor injury claims.

If your only claim is diminished value, the reality is that you will probably have to pursue the insurance company yourself, hire an appraiser if the value of the claim justifies it, and consider filing suit if the carrier refuses to make a reasonable offer.

If you or someone you love has been seriously injured or killed in a car accident, call us at 800-553-8082 or get a free consultation.