Detailed Answer
Quick summary: Diminished value is the difference between a vehicle’s market value before an accident and its market value after repairs. In North Dakota, a damaged vehicle can have diminished value that the at-fault driver’s liability insurer should cover as part of property-damage compensation. The claim process combines documentation of value loss, a written demand, and negotiation — and sometimes an independent appraisal, complaint to the North Dakota Insurance Department, or a court action if the insurer refuses to pay. This is an explanatory guide only; it is not legal advice.
What “diminished value” means
Diminished value is the reduction in a vehicle’s market value caused by its history of collision damage even after repairs look good. There are three common types:
- Immediate diminished value — the vehicle’s loss in value right after the crash but before repairs.
- Repair-related diminished value — poor-quality repairs, non-OEM parts, or visible damage that reduce value.
- Inherent diminished value — the market penalty a repaired car carries simply because it was in an accident, even if repairs are perfect.
Who can pay a diminished value claim in North Dakota?
If another driver caused the crash, their liability insurer is responsible for compensatory damages, which can include diminished value of your vehicle. If your own insurer paid for repairs under collision coverage, whether your insurer must pursue diminished value against the at-fault carrier depends on your policy’s terms (subrogation) and the insurer’s practices. In all cases, state insurance laws and the terms of the relevant policy affect how the claim proceeds. For general North Dakota law on insurer conduct and consumer protections, see the North Dakota Century Code and the North Dakota Insurance Department consumer resources: North Dakota Century Code (searchable) and North Dakota Insurance Department – Consumer Information.
Step-by-step: How the diminished value claim process usually works
- Document the crash and damage: Keep the police report, photos of the scene, photos of vehicle damage before and after repairs, repair invoices, and the repair shop’s estimate.
- Establish pre-accident value: Gather evidence of your car’s market value before the accident. Use vehicle valuation guides (Kelley Blue Book, NADA, Edmunds), local comparable sales, and dealer listings showing similar year/miles/options and condition.
- Get a post-repair valuation and/or independent appraisal: Obtain a professional diminished value appraisal or a dealer/industry appraisal that states the market value after repairs. An independent appraiser experienced in diminished value claims is often persuasive.
- Prepare a written demand: Send a demand letter to the at-fault driver’s insurer (and your own insurer if applicable). Include a clear explanation of diminished value, the math showing pre-accident minus post-repair value, repair invoices, photos, the appraisal report, and supporting market comps. Send via certified mail or another trackable method.
- Negotiate: The insurer may accept, deny, or make a settlement offer. Be prepared to explain your valuation methods and to push back if the offer is too low.
- Use internal appeal and regulatory complaint channels: If the insurer denies or delays unreasonably, use the insurer’s internal appeal process and, if necessary, file a complaint with the North Dakota Insurance Department. Visit ND Insurance Department – consumer information for complaint procedures.
- Consider appraisal clauses or litigation: If your insurance policy contains an appraisal or dispute resolution clause, follow that contract step. If negotiation and regulatory complaints fail, you can consider small claims court or a civil lawsuit to recover diminished value. Consult an attorney about the best forum and legal deadlines.
Evidence that strengthens a diminished value claim
- High-quality before-and-after photos (interior and exterior).
- Repair shop estimates and final invoices showing parts used and work performed.
- Independent diminished value appraisal report (methodology explained and comparable sales used).
- Pre-accident valuation documentation (KBB, NADA, dealer listings, recent private sale listings for similar cars).
- Vehicle history report (Carfax, AutoCheck) showing the accident, which can demonstrate market penalty.
- Evidence of using OEM parts or conversely of non-OEM/poor repairs if that lowered value.
Common insurer responses and how to handle them
Insurers often:
- Accept diminished value if the evidence is strong and the at-fault liability is clear.
- Offer a low settlement that covers cosmetic or repair costs but not inherent value loss — counter with an appraisal and market comps.
- Deny responsibility, asserting the vehicle was restored to pre-loss condition — respond with independent appraisal and proof of market penalty for accident history.
When to get a lawyer
Consider consulting an attorney if:
- The insurer refuses to pay any diminished value despite clear evidence.
- Liability is disputed and you face complicated factual or legal issues.
- The diminished value is large relative to the vehicle’s value and pursuing it would require court work.
- Your claim is time-sensitive and you need advice about filing suit or preserving rights.
Timing and legal deadlines
Statutes of limitation and procedural deadlines can affect your rights to sue for property damage. Check the North Dakota Century Code for applicable time limits and speak with an attorney promptly if you think you may need to file a suit. You can look up North Dakota statutes here: https://www.legis.nd.gov/cencode. The North Dakota Insurance Department also provides consumer guidance: https://www.nd.gov/ndins/consumer.
Helpful Hints
- Start documenting right away. The strongest claims use evidence gathered immediately after the crash.
- Keep all repair records and receipts. Repairs alone don’t always capture market perception of value loss.
- Obtain an independent diminished value appraisal from a company or appraiser with clear methodology and comparable sales data.
- Send a clear written demand and keep copies of correspondence. Use tracked delivery (certified mail/email with read receipts).
- If an insurer offers a quick check, ask for the offer in writing and verify whether accepting it waives future diminished value claims.
- File a complaint with the North Dakota Insurance Department if you suspect bad faith or unfair claim practices: ND Insurance Department – Consumer.
- Consider small claims court for lower-value diminished value disputes if negotiation fails; an attorney can advise on cost-effectiveness.
- Remember that accepting a repair estimate or payment that only covers repairs may not resolve diminished value — clarify whether a settlement included all property damage and loss of market value.
Disclaimer: This article is informational only and does not provide legal advice. It does not create an attorney-client relationship. For advice about your specific situation, contact a qualified North Dakota attorney or the North Dakota Insurance Department.