To answer “Does my total loss settlement include diminished value ? “


I think most people get this, but I get this question all the time, so I am writing this in an attempt to properly explain why a total loss settlement does not include diminished value.

  1. Let us define Diminished Value: It is the loss in re-sale value of a vehicle after it has been in a wreck and then repaired.
  2. Let us define Total Loss: This happens when the insurance company decides that they are not going to repair your vehicle.

There are a few things to realize when you are dealing with an automobile claim.

First, the insurance company is trying to get out for as cheap as possible. If you rant and rave right at the beginning of your claim about diminished value and rental and such, you will have a much higher probability that your vehicle is determined to be a total loss.

Next, don’t think that an insurance adjuster can’t change their mind. If they first tell you that your vehicle is repairable and then after they look at it a little better they decide that it is a total loss, there isn’t much you can do about it.

Third, don’t believe anybody that says there is a law about total losses. I am a licensed adjuster and have been handling claims for nearly 15 years and I am here to tell you there is no law about total losses. There is a law about when a vehicle title has to be flagged as a salvage vehicle, so maybe people are calling that law the total loss law, but be warned, the insurance company can declare your vehicle a total loss at any time prior to repairs being completed, and if they are brave, even after the repairs are done, but that gets a little sticky and will normally result in a lawsuit.

Total Loss – An Attractive Option

The total loss is attractive to insurance adjusters especially if they are dealing with a “difficult” customer. When a vehicle is totaled, in most States, the insurance company doesn’t have to pay for any more rental, so there is one big expense avoided.

Additionally, if they pay you for the fair market value of your vehicle BEFORE it got wrecked, then they are done with the claim. They paid you for your loss and you’re done. If you don’t agree with the value they quote you, it takes a bit of knowledge to get them to negotiate very much. Sure you can argue and argue and they may move up on the offer just a little to get you out of their hair, but it will not be a substantial difference.

You’ll have to hire an expert to really argue, and in my experience, people hire experts in the wrong situations.

You have to understand that the value an insurance company will pay you is based on how much you could get for your vehicle on the “private” market. You are not a dealer, you cannot get a retail price for your vehicle. You most likely don’t offer financing, can’t give a “certified” used car stamp, don’t do a 25 point inspection and do not have a huge marketing expense. The value you paid for your car, or the value of other cars sitting around on a dealer’s lot is not what the private value of your car is. Keep that in mind. If you disagree by $1500 or less, the insurance company is probably right about the value of your car, and you should give up the fight.

So How Do I Get Paid For Diminished Value or Loss Of Value After An Auto Accident?

The only time there is diminished value is if your vehicle is being repaired. If you are dealing with somebody else’s insurance company on the repair of your vehicle, and you don’t have a clunker, then you should research diminished value.

If you are dealing with your own insurance company, you could still qualify to get diminished value, but I would suggest you get an expert to give you some advice on whether or not you can successfully recover diminished value against your own carrier (see our article about first party diminished value claims). A lot of policies simply exclude that type of coverage. It is a matter of contract law vs. tort law, and I don’t know how to put it in any simpler terms.

In conclusion, a total loss never has diminished value.

It is a loss, therefore there is no more property available to have a value to diminish, get it? If you car is repairable, then yes, it will most likely suffer some diminished value, but whether you can collect it is based on contract law and tort law and varies according to the State where the accident occurred.

I hope this helps clear it up for you!

Posted in: Diminished Value, Total Loss