Detailed Answer

Overview — what diminished value means

Diminished value is the difference between a vehicle’s market value immediately before a covered loss (like an accident) and its market value after repairs. Even with high-quality repairs, many buyers will pay less for a vehicle with an accident history. That loss in resale value is what you can try to recover.

Step 1 — Confirm whether you have a diminished value claim

• If another driver caused the accident and they (or their insurer) are at fault, you can pursue diminished value from the at-fault driver’s liability insurer.
• If you are claiming against your own insurer, review your policy: some coverments and state laws limit or exclude diminished value payments.
• Collect basic facts: vehicle year, make, model, mileage, pre-accident condition, repair invoices, repair quality photos, and the police/accident report if available.

Step 2 — Gather documentation to support diminished value

Good documentation makes an appraisal credible and persuasive:

• Photos of vehicle before and after the loss (close-ups and wide shots).
• Repair estimates, invoices, and parts receipts showing what was replaced or repaired.
• Vehicle History Report (Carfax, AutoCheck) showing accident record and title status.
• Comparable sales data for similar vehicles (same year, trim, mileage, condition) from used-car sites and local listings.
• Any prior appraisal or valuation you might have (trade-in offers, Kelley Blue Book values, etc.).

Step 3 — Hire a qualified diminished value appraiser

Not all auto shops or body shops prepare diminished value appraisals. Look for appraisers who regularly do market-based diminished value reports. Consider these credentials and traits:

• Experience preparing pre- and post-loss market valuations and using comparable sales data.
• Membership or accreditation with appraisal organizations (for example, International Automotive Appraisers Association or other recognized appraisal organizations) or demonstrable experience in auto valuation.
• A written, itemized report that explains the methodology, shows comparables, and arrives at a numeric diminished value figure.

Typical appraisal costs vary; expect a range roughly between $200 and $600 depending on detail and region.

Step 4 — Understand common appraisal methods

Appraisers commonly use one of these approaches (or a combination):

• Market-comparison method: shows what similar, non-accident vehicles sold for vs. your repaired vehicle’s estimated resale value.
• Expert adjustment method: starts with pre-loss value and applies percentage reductions based on severity, visibility of repairs, and market sensitivity.
• Standard industry formula (often called the ’17c’ or other insurer-specific formulas): a quick calculation some insurers use; it is simple but can understate real market impact.

A strong report explains why the appraiser used a specific method and provides local comparable sales and market analysis.

Step 5 — Send the appraisal to the at-fault insurer

Send a clear demand package that includes the appraisal report, repair invoices and photos, the police report, and any vehicle history report. Include a short cover letter or email describing your demand and a deadline for response.

Step 6 — If the insurer disagrees

Common insurer responses include accepting the appraisal, offering a lower amount, requesting a second appraisal, or denying the claim. Your options in New Mexico include:

• Provide additional evidence or ask the appraiser to clarify or rebut insurer critiques.
• Request appraisal or appraisal arbitration if the policy contains an appraisal clause. That clause may allow a neutral umpire or appraisal panel to decide value.
• File a complaint with the New Mexico Office of Superintendent of Insurance (OSI) if you believe the insurer unfairly handled your claim: https://www.osi.state.nm.us/consumers/complaints/.
• Pursue the matter in court or small claims/magistrate court if negotiations fail. For court procedures and guidance in New Mexico courts, see: https://nmcourts.gov/.

Practical timeline

An appraisal and demand package can often be prepared in 1–3 weeks after you assemble records. Negotiations with the insurer may take weeks to a few months. If litigation or formal dispute resolution is needed, expect a longer timeline.

Costs and who pays

Appraisal fees are generally paid by the vehicle owner up-front. If you prevail or settle, you may be able to recover appraisal costs as part of the settlement depending on the insurer’s position or court decision.

When to get an attorney

Consider consulting a New Mexico attorney if:

• The insurer denies liability or refuses to negotiate in good faith;
• The diminished value amount is large relative to the repair and vehicle value;
• You need help with formal demand letters, appraisal arbitration, or litigation strategy.

Important: This article explains typical steps and practical tips. It is not legal advice. For advice about your unique situation, consult a licensed attorney.

Helpful Hints

• Start documenting immediately: take many photos of the damage and your repaired vehicle from multiple angles.
• Keep all repair invoices, parts receipts, and correspondence with insurers or shops in one folder (electronic or paper).
• Ask the repair shop for a detailed repair scope and parts description; insurer disputes often hinge on repair quality and parts used.
• Get a vehicle history report and include it in your appraisal package to show accident disclosures that affect resale value.
• When choosing an appraiser, ask for samples of past diminished value reports and references from clients or attorneys.
• Be realistic about the vehicle’s pre-accident value — overinflated pre-loss values can weaken credibility.
• If the insurer uses a quick formula to value diminished value, compare that result to a market-comparison appraisal and use the stronger evidence in negotiations.
• If negotiations stall, file a complaint with the New Mexico Office of Superintendent of Insurance: https://www.osi.state.nm.us/consumers/complaints/.
• Preserve communications: save emails, letters, and notes of phone calls with dates, names, and summaries.

For self-help information about New Mexico courts and small claims, start here: https://nmcourts.gov/resources/self-help/.

Disclaimer: This content is informational only and not legal advice. For advice about your situation, contact a licensed attorney in New Mexico.