Detailed answer: What diminished value means and the appraisal process

“Diminished value” is the loss in a vehicle’s market value caused by damage from a collision even after repairs are completed. There are three common types of diminished value claims:

• Inherent diminished value — the vehicle is worth less simply because it has a damage history.
• Repair-related diminished value — poor repairs, missing parts, or non-OEM parts reduce market value.
• Total-loss diminished value — difference between retail value and salvage/repair values when a vehicle is not repaired.

Colorado law does not create a special administrative procedure for diminished value claims; you rely on your insurance policy terms, general insurance claim practice, and, if needed, dispute resolution or litigation. For general consumer information about dealing with insurers in Colorado, see the Colorado Division of Insurance consumer pages: https://doi.colorado.gov/consumers. For statutory text and titles related to Colorado law, use the Colorado General Assembly statutes portal: https://leg.colorado.gov/statutes.

Step-by-step process to obtain a diminished-value appraisal

1. Act quickly and preserve evidence.

   Right after the accident and repairs, collect: photos of pre-accident condition (if available), photos of the damage, repair invoices, parts invoices, estimate(s), the VIN, odometer reading, make/model/year, and any vehicle history reports (Carfax, Autocheck). The sooner you document condition and repairs, the stronger your appraisal.

2. Notify the insurer and understand your policy.

   Tell the at-fault driver’s insurer (or your own, if applicable) that you intend to pursue diminished value. Review your policy for an appraisal clause or time limits for filing claims. If you later need to invoke an arbitration/appraisal clause in the policy, the clause usually requires each side to pick an appraiser and possibly an umpire to resolve disputes.

3. Select a qualified automotive appraiser.

   Look for appraisers with credentials in vehicle valuation or collision appraisal. Useful qualifications include experience as an ASE-certified technician, membership or credentials from appraisal organizations (for example, American Society of Appraisers or other auto appraiser groups), a track record of diminished-value reports, and favorable reviews from attorneys or consumers. Ask for sample reports and references.

4. Schedule an inspection and agree scope and fee in writing.

   The appraiser will inspect the vehicle in person, review repair records, and research comparable sales. Before inspection, get a written engagement letter that states what the report will cover, the methodology, the fee, and whether the appraiser will testify if the claim leads to litigation.

5. Appraisal methodology and report contents.

   A robust diminished-value appraisal typically contains:

   • Identification of the vehicle (VIN, mileage, options).
   • Summary of the accident, damage, and repairs (with invoices and photos).
   • Condition report before and after repair.
   • Market analysis using comparable sales (similar vehicles, adjusted for mileage, options, location, and condition).
   • Clear calculation of pre-loss value, post-repair value, and resulting diminished value with line-item adjustments and supporting comps.
   • Photos, copies of repair documents, vehicle-history report, and the appraiser’s qualifications and signed certification.
6. Submit the appraisal and negotiate with the insurer.

   Send a demand letter attaching the appraisal, repair records, and any market evidence. Include your claim number, the dollar amount of diminished value, and a deadline for response (commonly 14–30 days). If the insurer accepts, you can settle. If the insurer disputes the amount, you may negotiate, offer mediation, ask the insurer to use an independent appraiser, or, if your policy has an appraisal clause, invoke that contractual remedy.

7. If the insurer refuses to pay, consider dispute resolution.

   Options include informal appeal with the insurer’s claims supervisor, filing a complaint with the Colorado Division of Insurance, mediation, arbitration under your policy’s appraisal clause, or filing a lawsuit. Keep in mind litigation has costs and timelines; the appraiser’s willingness to testify and the strength of your market comps are important if you go to court.

Hypothetical example to illustrate the process

Example: You drive a 2017 sedan worth $15,000 before a rear-end collision. The vehicle is repaired for $4,000. You hire an appraiser; their market analysis shows similar 2017 sedans in your area now sell for about $12,000 because buyers prefer vehicles with no accident history. The appraiser issues a report stating a $3,000 inherent diminished value. You send the report to the at-fault driver’s insurer with a demand to pay $3,000. If the insurer declines, you may pursue appraisal arbitration under your policy (if available) or file a civil claim backed by the appraisal report.

Evidence and items appraisers rely on

• Vehicle identification (VIN, title, registration).
• Photos: pre-accident (if any), damage, and repairs.
• Repair invoices and parts receipts showing OEM vs. aftermarket parts.
• Vehicle history report (Carfax, AutoCheck) showing accident record.
• Comparable sales or dealer retail listings for similar vehicles in the same market.
• Appraiser’s inspection notes and signed valuation statement.

Practical timeline

From inspection to delivery, a quality appraisal commonly takes 1–3 weeks, depending on appraiser workload and complexity. Negotiations with the insurer can add days to months. Preserve all records and follow insurer deadlines for submitting proof of loss.

Colorado-specific considerations

Colorado does not have a special statutory diminished-value process separate from ordinary property-damage claims. Your claim will follow the insurer’s claim-handling procedures and your policy language. If you believe the insurer handled your claim unfairly, you may contact the Colorado Division of Insurance consumer resources at https://doi.colorado.gov/consumers or review Colorado statutes and insurance regulations via the state legislature site: https://leg.colorado.gov/statutes.

Because rules, court decisions, and insurer practices can change, consider consulting an attorney if the claim amount is large or the insurer refuses reasonable settlement. An attorney with experience in Colorado automobile or insurance claims can explain deadlines, statutes of limitations, and whether small-claims court is a viable forum for your dollar amount.

Helpful Hints

• Document everything immediately: photos, invoices, and all communications with insurers.
• Keep original repair invoices and parts receipts showing OEM or aftermarket parts.
• Get a vehicle-history report and include it with your appraisal to show buyers’ likely reaction to an accident record.
• Ask potential appraisers for sample reports and whether they will testify if needed.
• Compare multiple appraisers or valuation services if you want to verify results—look for consistent market-based conclusions.
• Review your insurance policy for appraisal clauses and deadlines before you sign any release or accept a settlement for repairs only.
• If the insurer offers a low settlement, request a written explanation and dispute it in writing with the appraisal attached.
• If the claim is denied or delayed unreasonably, you can file a complaint with the Colorado Division of Insurance: https://doi.colorado.gov/consumers.