Diminished Value Claims After a Colorado Car Accident — Frequently Asked Questions

Short answer: If your vehicle loses market value after a crash and repair, you may be able to recover that loss through a diminished value claim in Colorado. The claim process usually involves documenting the vehicle’s pre‑accident value, getting a professional diminished value appraisal, presenting the claim to the at‑fault party’s insurer (or your own insurer if appropriate), and negotiating or pursuing appraisal or court action if insurers refuse to pay.

What is diminished value?

Diminished value is the difference between what your vehicle was worth immediately before an accident and what it is worth after repairs. Even if repairs restore function and appearance, many buyers pay less for a vehicle with an accident history. That loss in market value is a recoverable element of property damage in many car crash claims.

Who can pursue a diminished value claim in Colorado?

If another driver was at fault, you can generally pursue diminished value from that at‑fault driver’s liability insurer as part of your property damage claim.
If you were at fault or the crash is a no‑fault situation, your first‑party (your own) insurer may or may not cover diminished value depending on your policy terms—some policies explicitly exclude diminished value while others permit first‑party diminished value claims.
If there is a lienholder (bank or finance company), they may also have an interest in the claim proceeds; notify them if required by your loan agreement.

Step‑by‑step process to make a diminished value claim in Colorado

Report the claim promptly. Notify the at‑fault driver’s insurer (or your own insurer if you have potential first‑party coverage) that you intend to pursue full property damage, including diminished value. Prompt notice preserves your rights and helps with evidence collection.
Document pre‑accident condition and value. Gather proof of your vehicle’s condition and market value before the crash: recent vehicle listings for similar makes/models/miles, blue book values (e.g., Kelley Blue Book, NADA), recent maintenance records, photos taken before the accident, and any recent inspections or appraisals.
Obtain repair records and photos. Keep all repair invoices, parts lists, and before/after photographs. Repair facility documentation showing the extent of repairs and whether structural components were involved will support diminished value calculations.
Get a professional diminished value appraisal. Many claimants hire an independent appraiser who specializes in diminished value reports. A credible appraisal explains the methodology for arriving at a diminished value number and often carries more weight in negotiations.
Present a written demand. Send a clear demand package to the at‑fault insurer: summary of the accident, proof of fault, pre‑accident value evidence, repair invoices, the diminished value appraisal, and a specific dollar demand. Keep copies of all correspondence.
Negotiate. The insurer may accept, reject, or counter your demand. Be prepared to explain and document your valuation. Insurers sometimes dispute diminished value or apply different valuation methods (e.g., percentage of pre‑accident value, cost of repairs vs. market effect).
Use appraisal or appraisal clause (if available). Some insurance policies include an appraisal clause that allows an independent appraiser or umpire to resolve value disputes. This process varies by policy and is more common in first‑party disputes.
Pursue legal remedies if necessary. If negotiations fail, you can sue the at‑fault driver or their insurer for property damage (including diminished value). Small claims court is an option for modest claims and is faster and cheaper than district court. For larger claims, consult an attorney to evaluate filing a civil action.
File a complaint with Colorado Division of Insurance if insurer acts unfairly. If you believe an insurer engaged in bad faith or unfair claim practices, you can file a consumer complaint with the Colorado Division of Insurance: https://doi.colorado.gov/consumers/file-complaint

Evidence that helps prove diminished value

Independent diminished value appraisal (written report).
Pre‑accident vehicle listings and valuation guides (KBB, NADA).
Odometer and maintenance records showing condition and mileage.
Repair estimates, final invoices, and photos of damage and repair quality.
Vehicle history reports (Carfax, AutoCheck) showing accident notation.
Comparable sales showing what similar undamaged vehicles sell for in your market.

Common insurer defenses and how to handle them

“No diminished value after quality repairs.” Argument: some insurers claim repairs restore full value. Response: present market data and an independent appraisal showing buyers avoid vehicles with an accident history.
“Pre‑existing damage or condition.” Response: document pre‑accident condition and show the accident introduced the damage in question.
“We don’t cover this under your policy.” Response: if pursuing the at‑fault insurer, policy coverage usually isn’t the issue—liability insurers owe indemnity for property damage their insured caused. If negotiating with your own carrier, review policy language and consider legal advice.

Timeline and expectations

There’s no fixed timeline. Simple cases can settle in weeks; disputed claims may take months or longer. Expect several rounds of negotiation. If you sue, resolution depends on the court schedule and whether the case settles before trial.

Where to get help

Independent auto appraisers experienced in diminished value reports.
Experienced Colorado property damage or auto accident attorneys for larger or contested claims.
Colorado Division of Insurance for consumer questions and to file complaints: https://doi.colorado.gov/consumers
Colorado Revised Statutes and legislative resources: https://leg.colorado.gov

Helpful Hints

Act quickly: report the accident and preserve evidence (photos, receipts, pre‑accident records).
Obtain an independent diminished value appraisal before accepting any final repair payment.
Keep detailed records of all communications with insurers and repair shops—dates, names, and content.
Consider small claims court for modest diminished value amounts — it’s faster and less expensive than hiring an attorney.
If the at‑fault insurer accepts liability, make sure any settlement language releases only what you intend. Don’t sign a broad release without confirming it doesn’t bar your diminished value claim unless you’re being paid for it.
If your vehicle is financed or leased, notify the lender or leasing company as required and check whether they must sign off on repairs or settlement proceeds.
If an insurer seems to delay or deny without a reasonable basis, document the conduct and consider a complaint to the Colorado Division of Insurance: https://doi.colorado.gov/consumers/file-complaint

Final note and disclaimer: This article explains general information about diminished value claims in Colorado. It is for educational purposes only and does not create an attorney‑client relationship. This is not legal advice. For advice tailored to your situation, consult a Colorado attorney experienced in auto accident and property damage claims.