What Is a Diminished Value Claim in Texas?

September 11, 2025

Hartley Law is a Dallas area personal injury firm that specializes in car accident injury cases. In some cases, there are grounds to file a diminished value claim for the possible loss of value to your vehicle. Below is helpful information regarding the steps to take to file a diminished value claim as an individual. While Hartley Law can help with filing a claim, we can only do so as part of an accident injury case. If someone has been injured in a car or truck accident, contact Hartley Law today to get the help that you need.

A diminished value claim is a demand for the lost market value of your vehicle after an accident. In other words, the difference between the pre-accident value of your car and its post-accident value. With a diminished value claim, you are looking for compensation you will lose when selling the vehicle because of the damage done in the collision. Each party involved in the collision plays a role in determining the diminished value.

Diminished value claims can be challenging to prove and are often heavily defended by insurance companies. However, they are not impossible, and with the right advocate by your side, your diminished value claim can be successful.

After being in an accident, you shouldn’t have to worry about the stress of bodily injury along with losing money when you sell your car. The experienced team at Hartley Law can examine your accident injury case and determine if there are also grounds for a diminished value claim. Contact us today to examine your case!

Are You Qualified?

Key Takeaways

A diminished value claim seeks compensation for the loss in your vehicle’s resale value after it’s been damaged and repaired.
To file a diminished value claim in Texas, you’ll need to gather repair records, proof of loss in value, and submit the claim to the at-fault party’s insurer.
The statute of limitations for diminished value claims in Texas is two years from the date of the accident.
Third-party diminished value claims can be filed against the at-fault driver’s insurer, while first-party claims are limited and typically not covered unless specifically stated in your policy.
The limit for cases in Texas small claims court is $20,000, including court costs.
Hiring a qualified third-party appraiser can help determine a fair and accurate diminished value estimate.
At Hartley Law, we stand up for clients when insurance companies try to downplay or deny the compensation they’re rightfully owed, and can assist in diminished value claims as long as we’re handling your accident injury case.

Pursuing a Texas Diminished Value Claim

The Texas Department of Insurance (TDI) does not require motorists to carry insurance to cover diminished value, so most car insurance policies do not offer this protection. However, you can still pursue a diminished value claim if you are in an accident that leaves your car with significant damage.

You and your car insurance carrier can negotiate a settlement, including the estimated cost of your vehicle’s diminished value. In Texas, you must only carry a minimum of $25,000 worth of coverage for property damage. If the damage exceeds that, there is a chance to claim diminished value compensation under your policy’s underinsured motorist coverage.

If the car wreck was not your fault, you can seek diminished value from the at-fault driver’s insurance company. If the other driver caused the wreck through negligence or carelessness, which led to your vehicle’s reduced value, you can file a claim for that lost value.

How to File a Diminished Value Claim in Texas

Filing a diminished value claim is a must, like filing any other claim for compensation following an accident. Under Texas law, you generally have two years from the accident date to file a diminished value claim against the at-fault driver’s insurance company. This is typically a third-party claim because you are not filing it with your insurance carrier but rather the other driver’s policy.

In Texas, to file a diminished value claim:

You must own the vehicle or be financing it (i.e., making payments); it cannot be leased,
You must not be at fault for the accident,
The car must not have a prior history of accidents,
The vehicle must have lost resale value,
There must be a specific lost value amount (i.e., a certain dollar amount),
The insurance company must allow a diminished value claim, and
The other driver must be at fault for the accident and not have enough coverage to cover the cost of the diminished value.

Hartley Law has provided a free diminished value claim letter template on our website for those looking for guidance on self-filing. If you have any questions, feel free to reach out to our team for assistance.

You cannot just simply claim your car’s lost value. Instead, you need documentation and supporting evidence. Following an accident, you should have the vehicle repaired and keep all records of estimates, expenses, and receipts from the mechanic, autobody center, or repair company. Once the repairs are complete, you must have the car assessed and a valuation estimate completed illustrating the car’s diminished value.

Having more than one estimate to bolster your diminished value claim is also a good idea. Multiple estimates allow the insurance company to calculate an average among them. It also strengthens your claim if multiple estimates are within the same general monetary range.

Types of Diminished Value Claims

There are three main types of diminished value claims, each based on when and how the loss in vehicle value occurs:

Inherent Diminished Value: This refers to the loss in resale value that remains even after a vehicle has been properly repaired, simply because it now has an accident history on record. For example, even if a car is restored to like-new condition, potential buyers may still offer less knowing it was previously damaged. This is the basis for most claims filed in Texas, especially in third-party cases where the vehicle has been repaired but its market value still takes a hit.
Immediate Diminished Value: This represents the theoretical loss in value immediately after the accident but before any repairs take place. This type is rarely pursued, as it’s difficult to quantify and usually irrelevant once repairs are made.
Repair-Related Diminished Value: This happens when the quality of repairs lowers the vehicle’s value, such as when a shop uses aftermarket parts or the bodywork is visibly flawed.

What If the Insurance Company Denies My Diminished Value Claim?

Insurance companies often deny diminished value claims for several reasons:

They may dispute who was at fault
They argue the damage wasn’t significant enough to reduce value
They claim the repairs fully restored the vehicle

Some insurers also rely on the fact that many attorneys won’t handle standalone diminished value cases unless they’re already representing the injured party in a broader accident claim.

If your claim is denied, you still have options. You can respond with stronger evidence, such as an independent appraisal or multiple estimates showing the loss in value. If negotiations stall, you may consider filing a lawsuit in Texas small claims court, where the current claim limit is $20,000, including court costs.

Hartley Law helps clients challenge unfair denials, especially when these claims are part of a larger personal injury case. We assist in gathering the right documentation, reviewing appraisal accuracy, and preparing a strong case if small claims court becomes necessary.

How to Calculate a Diminished Value Claim

There’s no official diminished value calculator used by Texas courts or insurance companies, which means determining an accurate claim amount isn’t as simple as plugging numbers into a tool.

Instead, most claimants rely on professional, third-party appraisers to provide an unbiased evaluation rooted in real market data. These experts consider factors like your car’s pre-accident value, its current value after repairs, vehicle history reports, and how the damage affects buyer perception.

While some insurers use general formulas like the 17c method to estimate loss, this formula isn’t mandated or consistently accepted in Texas and often undervalues the actual diminished worth. Getting multiple appraisals from credible sources can help support your claim and counter lowball offers. An experienced attorney can also help interpret valuation reports, challenge unfair assessments, and ensure your claim reflects your vehicle’s true loss in value.

Texas Diminished Value Law

Under Texas law, you typically have two years from the date of the accident to file a diminished value claim. While there’s no single statute that explicitly defines diminished value recovery, Texas courts have long recognized it as a valid form of damages under common law.

In Thomas v. Oldham, 895 S.W.2d 352, 359 (Tex. 1995), the court affirmed that the proper measure of damage is “the difference in the property’s market value immediately before and immediately after the injury.” This is consistent with the principle outlined in Pasadena State Bank v. Isaac, 228 S.W.2d 127 (Tex. 1950), and Central Freight Lines, Inc. v. Naztec, Inc., 790 S.W.2d 733 (Tex. App.—El Paso 1990, no writ). In Exxon Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex. 1981), the court defined market value as the price a property would bring when sold willingly by a seller to a buyer under no compulsion. This underpins how diminished value is assessed after a repair.

Texas Pattern Jury Charges also reflect this standard by instructing jurors to consider the difference in market value of the vehicle “immediately before the occurrence in question and immediately after the necessary repairs were made.” This makes it clear that a vehicle can still suffer a measurable loss in value even after competent repairs, especially when accident history affects resale value.

Texas Modified Comparative Fault System

Texas is a modified comparative fault state, which means that a victim’s recovery is reduced by their percentage of fault, and if a person is more than 50% responsible for an accident, they are barred from recovering anything. If the insurance company believes you are partially at fault for the accident, it can affect your potential diminished value claim by either reducing it or denying it altogether.

Diminution of Value in Texas

Diminution of value refers to the loss in your vehicle’s market or resale value after it’s been damaged and repaired. Texas law recognizes this loss as a valid form of property damage, and it’s something you can pursue compensation for through an insurance claim or in court.

To prove this loss, you’ll need credible evidence such as third-party appraisals, market comparisons, or documentation showing lower trade-in or resale offers due to the vehicle’s accident history. This diminished value can significantly impact what your car is worth to future buyers or dealerships, making it harder to sell or get full value in a trade. When insurers dispute the amount—or the claim entirely—having an attorney by your side can make all the difference in proving the value you’ve lost and holding the insurer accountable.

Texas Diminished Value Claim Attorneys

At Hartley Law, we ensure that drivers receive adequate compensation for their injuries and fair reimbursement for their lost property value. In 2021, we were named Litigator of the Year by the American Institute of Trial Lawyers. We are not afraid to negotiate or bring your claim to litigation if necessary. Contact us today to discuss your options at a free, no-obligation consultation.