Diminished value claims by state / Texas
Diminished value claims in Texas
By the Reclaim research team · Last updated · Legal review pending
In Texas, lost market value after a crash is generally claimed from the at-fault driver's insurer, and the Texas Department of Insurance says that insurer may be obligated to pay it even after a complete repair. Your own policy generally does not pay diminished value once the car is fully repaired, and a lawsuit over car damage must be filed within two years.
- Other driver at fault
- The insurance department says a liability insurer may be obligated to pay lost market value (Bulletin B-0027-00).
- Your own policy
- No after a complete repair (Am. Mfrs. Mut. v. Schaefer, 2003). Uninsured motorist coverage may differ.
- Deadline to file suit
- 2 years
Claims against the other driver's insurer
When another driver caused the crash, Texas measures damage to a car by the drop in its market value, or by the reasonable cost of repair when repair makes sense. The Texas Supreme Court restated those measures in J&D Towing v. American Alternative Insurance (2016).
The Texas Department of Insurance addressed diminished value in Commissioner's Bulletin B-0027-00, issued April 6, 2000. It says a liability insurer may be obligated to pay a third-party claimant for loss of market value, regardless of how complete the repair was.
Texas does not allow double recovery. A claim for lost value compares the car's value before the crash with its value after repair, and the owner carries the burden of proving that drop.
Claims under your own policy
In American Manufacturers Mutual Insurance Co. v. Schaefer (2003), the Texas Supreme Court held that the standard Texas personal auto policy does not require the insurer to pay diminished value when the car has been fully and adequately repaired. The same bulletin takes that position for first-party claims.
Uninsured and underinsured motorist coverage is different. The bulletin says an insurer may be obligated to pay loss of market value under those coverages, regardless of how complete the repair was.
Filing deadline
Texas gives two years from the date the claim accrues to file a lawsuit for injury to property (Tex. Civ. Prac. & Rem. Code 16.003). For a car crash, that clock usually starts on the day of the crash.
The deadline is for filing suit. Talking with an insurer does not by itself extend it. A Texas attorney can confirm how the deadline applies to your dates.
How diminished value claims tend to go in Texas
Both sides of Texas claims cite Bulletin B-0027-00. Expect a first-party request to be declined under Schaefer, and a third-party request to turn on proof of lost market value.
Many insurers answer a diminished value request with a formula rather than a market study. The best known is the 17c formula, which came out of the Georgia class actions over first-party claims that followed State Farm v. Mabry; its name comes from paragraph 17(c) of an injunction in one of them. It starts from a capped share of the car's value before the crash, then reduces it with damage and mileage modifiers. A law-firm survey notes it was built for that class action and has not been formally adopted for general use.
Adjusters commonly ask for proof that the repaired car is worth less, not only proof that it was damaged. Records that tend to matter: the final repair invoice and photos, the estimate showing any structural or frame work, the vehicle history report entry, and written market evidence such as dealer quotes or listings for the same car with and without an accident history.
Lost value is easiest to show once repairs are finished, because the value after repair is what gets compared with the value before the crash.
If you have a complaint about claim handling
If you have a problem with how an insurer handled a claim, the Texas Department of Insurance takes consumer complaints. File with the Texas Department of Insurance.
Next steps
Questions
- Can I get diminished value from my own insurer in Texas?
- Generally not after a full, adequate repair. The Texas Supreme Court held in Schaefer (2003) that the standard Texas auto policy does not cover it. Uninsured or underinsured motorist coverage is treated differently under the Department of Insurance bulletin.
- Does the at-fault driver's insurer pay diminished value in Texas?
- It may. The Texas Department of Insurance says a liability insurer may be obligated to pay a third-party claimant for loss of market value, regardless of how complete the repair was. The owner still has to show the drop in value.
- How long do I have to file a diminished value claim in Texas?
- A lawsuit over damage to property must be filed within two years under Tex. Civ. Prac. & Rem. Code 16.003. Insurance claims are usually opened much sooner, but the two-year date is the outside limit for filing suit.
- Does Reclaim handle the claim for me?
- No. Reclaim does not contact your insurer or act for you. This page is general information, not legal advice, and you stay in charge of your claim.
Check your Texas diminished value for free
If you kept the car after repairs and the other driver's insurer is handling the claim, the free check gives you an objective figure. It is not a recovery target.
- Who was at fault, and whether the repairs are finished.
- Roughly what the car was worth and what the repairs cost.
- Then your name and number, and the repair invoice.
This page is general information about Texas law, not legal advice. Laws and court decisions change. For advice on your own claim and dates, talk with a Texas attorney.