How Do You Ask for Diminished Value?

Wouldn’t it be nice if insurance companies informed you that you’re owed diminished value and then just sent you a check for an amount that’s fair? One can dream. In the real world, car owners need to ask for diminished value to get it. And “ask” isn’t the best word to describe what you should do – you should demand it. Insurance companies prefer if the diminished value isn’t claimed because that just means more money is added directly to their profits. The average diminished value amount is $5,000. The only reason a car owner would leave this money on the table is a lack of knowledge about diminished value and lack of awareness about their rights.

accident victim talking about diminished value of his car
2 Simple Steps to Ask for Diminished Value
  1. Obtain an independent diminished value appraisal.
  2. Claim diminished value by sending a Demand Letter to the insurance company.
Obtaining a Diminished Value Appraisal

Simply asking for diminished value is not a good idea because that puts you at the insurance company’s mercy. They will decide the amount for you and you probably won’t like it. This is like letting the wolf decide what he’ll have for dinner. Instead, it’s much better to claim a defined amount in diminished value compensation and it’s even better to be able to prove that amount with an independent appraisal. Insurance claims are adversarial negotiations and in negotiations whoever names the first amount has an advantage. This is known as the anchoring bias.

Not all appraisals are created equal. Any appraisal produced by a calculator or a formula is not reliable. A proper diminished appraisal considers a multitude of factors including but not limited to the car’s age at the time of the accident, mileage, make, model, trim, nature of the damage, local market valuations, normal depreciation, and even color. That is too many factors to be properly taken into account by any formula or a calculator. Sure, you can buy a computer-generated appraisal for $17.95 but you will get what you pay for. Such an appraisal will likely be rejected by insurance companies because it’s unreliable.


It’s absolutely critical to make sure your appraisal is compliant with USPAP. USPAP stands for Uniform Standards of Professional Appraisal Practice and is the accepted appraisal standard in the United States. Adopted by Congress in 1989, it’s used by reputable appraisers in the appraisal of not just vehicles but also real estate, jewelry, paintings, and any other kind of personal property. USPAP is continuously updated every two years so that appraisers are aware of current best practices. Never purchase an appraisal that is not USPAP-compliant. USPAP compliance ensures that the appraisal methodology used is fair and that a number of strict ethical standards are upheld by the appraiser throughout the appraisal process.

The existence of USPAP is also why car owners trying the DIY approach or online calculators have a very hard time with their diminished value claims. The amount they arrive at is just a number, a guess – it’s not a legitimate appraisal that uses a USPAP-compliant methodology. And the amount was not derived by a neutral third-party appraiser thus involving a high level of bias. It’s very easy for insurance companies to simply deny such claims because the amount of diminished value was not properly proven with a legitimate third-party USPAP-compliant appraisal. And frankly, it’s reasonable for them to do so.

Inflated appraisals are another problem. Certain unethical appraisers artificially inflate their diminished value estimates in an attempt to garner more client business. Every car owner wants to get a diminished value check that’s as big as possible. So there is a temptation to go with the appraiser who gave you the highest estimate. That is a trap. Insurance companies keep track of appraisals provided by various appraisers and they know which companies tend to produce inflated appraisals and target them for denials. Make sure your appraiser doesn’t inflate their appraisals to get your business because this is something that can backfire on you, the client. If a certain estimate is much higher than other estimates you got – it’s probably inflated.

Let’s say you received four diminished value estimates from four different appraisers.





The $5,800 is likely the inflated estimate from an unethical appraiser and that’s the appraiser you want to stay away from.

Sending in the Claim
Demand Letter

The best way to submit your diminished value claim is to do it the way attorneys do it – send the insurance company a Demand Letter. A Demand Letter is exactly what it sounds like – it’s a demand for payment. In this case, you demand payment for diminished value because the company’s Insured has hit your vehicle. Why are you demanding the amount from the insurance company and not the person who hit you? Because you’re taking a shortcut. The Liability Policy of the person who hit you obligates the insurance company to indemnify them in case of an accident caused by them. And knowing this you will attempt to collect from the person’s Liability Policy rather than directly from them because it’s more efficient and practical.

A Demand Letter should be sent in a fully documented and traceable way: either by certified mail or email. If you’re sending by email, make sure to save every email received from and sent to the insurance company for your records. This may come in handy later if the insurance company tries to play games with you. Avoid negotiating your claim on the phone. An experienced adjuster deals with over 100 claims a day. An average driver experiences one accident every 18 years. Who do you think will have an unfair advantage in a phone negotiation? If possible, also avoid submitting your via the insurance company’s website claim submission systems – these systems are mainly designed for their benefit, not yours. And it’s hard to document a proper paper trail if you’re submitting your claim on the insurance company’s website.

Once you sent your Demand Letter, give the company a reasonable time to respond. What’s reasonable? 2-4 weeks. Insurance companies are obligated to respond to claims in a timely manner. The definition of “timely” varies from state to state and in some states, the time period is not strictly defined. Regardless, major insurance companies usually respond within a reasonable time frame unless something extraordinary happened such as your claim somehow getting lost in their system. If the insurance company fails to promptly respond, you can always complain to your state’s insurance regulator who can force the company to respond.

Initial Insurance Company Response

insurance company initial offer

You may receive one of the following initial responses from the insurance company.

  • an offer
  • a request for more information
  • a denial
  • no response (rare)

Since we already discussed what to do in the rare case of no response, let’s focus on the others. Most of the time claimants receive some kind of an offer. Although it might not be an offer you like. It might be what we call a “lowball” offer or it may be a good, serious offer. What kind of offer you will get cannot be predicted in advance. If you get a lowball offer, you’d be wise to reject it.

Another type of response is the request for more information. These requests can be reasonable and be made in good faith. They can also be unreasonable and be made in bad faith. Good faith means the company is sincerely investigating your claim and needs more information to establish the amount of your loss. Bad faith means the company is simply using requests for more information as a delay tactic in order to avoid payment.

Thanks to the experience of dealing with countless client claims against many different insurance companies, at Tiger DV, we know which requests for more information are reasonable and which are simply underhanded tactics to evade payment on a valid claim. In some cases, once the insurance company has decided to choose the “we need more info” path – no additional information will ever be “enough” because the requests are made in bad faith and they’ve already decided not to pay you or pay you much less than what you deserve. For this reason, many unreasonable requests for more information are actually unfair denials dressed up as requests for more information.

Finally, denial is usually a letter stating that the insurance company will not be paying you anything on your claim. State insurance regulations require that insurance companies provide a reason for the denial and most companies put in at least some effort into including a plausible-sounding reason (or excuse). But sometimes, the reason is as generic as “insufficient proof of loss was provided.” Who decides what’s sufficient? The insurance company does, of course. This is akin to the wolf deciding on whether it’s OK to eat chickens but insurance companies do have a right to deny any claim.

The good news is that it’s possible to “deny” their denial by forcing the insurance company to pay up anyway. A complaint to your state’s insurance regulator may change their tune. Or you could file in Small Claims against the person who hit you – that tends to be extremely helpful in adjusting the insurance company’s attitude. Most people don’t like conflict or putting in any kind of effort and quietly walk away with the denial letter in their hand. But that’s exactly what the insurance company wants! Every unpaid claim equals more profit for them regardless of whether the denial was fair or not. Don’t become an insurance industry statistic – stand up for yourself.

To see how big your diminished value claim is get a free diminished value estimate.

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