How to Calculate Your Diminished Value
Most insurance companies use a diminished value calculation known as the 17c. It is worth noting however, that this formula does not have absolute control over the law in Texas. It extremely favorable to the insurance companies and this is why they all quickly adopted it. You need to know how the diminished value comes about as it works even in the state of Texas. First, you must calculate the value of the car. The formula begins with the value of the car determined by NADA. It is a reasonable place to start and they will adjust the NADA number up depending on the base model of your car in case you get upgrades.
If there is prior damage as well as mileage, the value will be adjusted down. You will end up with the retail value of the car. The next step is applying for an arbitrary cap for damages. The 17c formula will then take the market value of your vehicle then multiply it by 0.10 so that you get the base loss of value. You will not find any logical basis for this cap but it is applies on the Hansen Price diminished value.
You will then apply a damage multiplier on the value you have come to in the previous steps. Since the insurance company has already set an upper limit, they will start reducing the claim and this is based on the severity of the damage on the car. If there was only cosmetic damage, then the multiplier will be small and this will affect the claim severely. However, if the structural damage was substantial, then the multiplier is going to be large and this will only reduce the claim by a small margin. You will then take the base loss of value then have it multiplied by this number based on the level of damage. Watch https://www.youtube.com/watch?v=72b03CSjhtM for more details about diminished value.
The last step is taking a double dip on the mileage. The mileage will have a second multiplier and this discounts the diminished value. This multiplier works the same as the damage multiplier as it has figures you choose depending on the mileage you have. You need to know how to use this formula well because if you are not careful, you will have all kinds of information that the insurance companies will use to confuse you. If possible, hire a lawyer to prosecute the Hansen Price diminished value claim to assist settlement and if necessary, litigation.