Diminished Value Claims in Nevada – 5 Fast Facts

A successful diminished value claim in Nevada permits you to recover compensation for the value your automobile lost due to a car accident. Depending on your type of vehicle and the extent of the damage, this can be thousands of dollars if not more.

Below I discuss five things you should know about diminished value claims in Nevada.

1. Diminished Value Is a Type of Compensatory Damages

After a car accident, I fight for all the compensatory damages you are owed in your personal injury case. A big part of this includes damages related to your physical injuries, including:

• medical expenses,
• pain and suffering, and
• lost past and future wages from being too injured to work.

In addition, I seek compensation for your property damage. This includes not only your car repairs but also your car’s diminution in value that the accident caused.¹

Example: Before your car accident, your Honda was worth $40,000. Post-accident, its worth amounts to only $30,000. Therefore, you can file a diminished value claim with the at-fault driver’s insurer for the $10,000 difference.

2. Diminished Value Claims Come in Three Types

Your automobiles can lose their value following a car accident in the following three ways:

1. The stigma of the vehicle’s new accident history, which can diminish the resale value.²
2. The immediate diminished value after the accident and before any repairs are made.³
3. The repairs themselves, which can diminish the value of the vehicle if the repairs are not high quality.

Depending on the stage your case is in and the state of your motor vehicle, you can pursue one or more of these diminished value claims.

3. You Might Not Get Compensation if You Were at Fault

Since Nevada is a “fault state,” the majority of automobile insurance policies in Nevada do not pay for your car’s diminished value if you caused the damage. I check the fine print of your car insurance policy to see if there is any way we can still win one of these claims even if you were at fault.

Example: Sally sideswipes her garage while parking her car. She gets new paint on her door, but the body shop cannot find a perfect color match. This mismatch between her door and the rest of her car lowers the value of the car. Unfortunately, Sally cannot claim diminution of value since she caused the accident.

4. Insurance Companies Use a Formula to Calculate Diminished Value

Many Nevada insurance companies rely on the “17C Formula” to calculate your vehicle’s diminished value following an accident. This involves three steps.

First, they take your car’s pre-accident appraisal value (typically from National Automobile Dealers Association or Kelley Blue Book) and multiply it by 0.1. The result is called the “base loss of value.”

Second, the “base loss of value” is multiplied by a “damage multiplier” of 0 to 1 based on the severity of the car damage, as the following table shows.

Third, the resulting number is multiplied by a “mileage multiplier” of 0 to 1 based on the mileage of your car, as the following table shows:

The final result is your car’s diminished value.⁴

Example: Tom’s 2020 Nissan Altima is damaged in a car crash. He files a diminished value claim against the at-fault driver’s insurance company. The insurance company uses the 17c Formula as a diminished value calculator.

Tom’s car is appraised by NADA at $15,000, so its base loss of value is $1,500 ($15,000 times 0.1).

Because there was moderate damage, the base loss of value ($1,500) is multiplied by 0.5 down to $750.

Because Tom’s car had 90,000 miles on it at the time of the accident, the mileage multiplier is 0.2. This puts the diminished value claim at $150 ($750 times 0.2).

In my experience, the 17C Formula is not an adequate method to measure diminution in value. Fortunately, insurance companies are usually willing to increase their settlement offer in order to avoid going to trial.

5. Proving Your Case Is an Uphill Battle

Many insurance companies require extensive proof before paying out a diminished value claim. I see this especially when we are asking for a lot of money.

Three ways I can prove that your car had a substantial diminution in value are by:

1. hiring an independent party to appraise your automobile’s value,
2. asking a sales manager at a local car dealership to estimate in writing what they would have offered for your car prior to the collision, and/or
3. selling your car or offering it as a trade-in.

Ultimately, I would compare your automobile’s sale or appraisal price against the normal market value of other automobiles of an identical make and model and similar mileage. The difference – which represents your vehicle’s diminished value from the collision – serves as strong proof in your insurance claim.

Additional Reading

For more in-depth information, refer to these scholarly articles:

• Diminished Value in Automobile Insurance: The Controversy and Its Lessons – Connecticut Insurance Law Journal.
• Inherent Diminished Value in Motor Vehicle Torts – Boston University Law Review.
• Reconciling the Principle of Indemnity in Diminished Value Automobile Insurance Claims – Connecticut Insurance Law Journal.
• Use of Repair Estimate Information to Evaluate Physical Damage Severity in Two-Car Accidents – SAE Transactions.
• Some Tips on Automobile Damage Estimates – Army Law.