Diminished Value Claims in Arkansas: When the Other Driver’s Insurer May Owe for Lost Resale Value
A good repair can put a car back on the road and still leave it worth less to the next buyer. That gap is diminished value. Here is how Arkansas measures damage to a vehicle, whose insurance it usually involves, and how to build a claim an adjuster has to take seriously.
What is a diminished value claim?
A diminished value claim asks for the difference between what your car was worth just before the accident and what it is worth after the accident, usually after it has been repaired. It is a claim for lost market value, separate from the repair bill.
Why a repaired car can be worth less
Buyers and dealers may pay less for a car with an accident history, especially one with structural or frame repairs, even when the work was done well. The repair restores how the car works. It may not restore what the market will pay for it.
Repair cost and lost value are different numbers
The repair estimate measures what it costs to fix the car. Diminished value measures what the fixed car still loses at resale. A claim may include both, but they are proved in different ways.
It is not a total loss claim
When a car is not worth repairing, the insurer pays its value instead and diminished value does not arise. Our guide to totaled car settlements in Arkansas covers that case.
Loss of use is its own item
Arkansas’s vehicle damage statute adds a reasonable amount for loss of use of the vehicle on top of the change in value. Rental costs or the value of going without the car are a separate part of the claim, not part of diminished value.
A simple example
Say a car was worth $30,000 the day before a crash. The at-fault driver’s insurer pays $8,000 for repairs. Afterward, two Northwest Arkansas dealers say the repaired car would bring about $26,500. The repair bill is one number. The $3,500 gap in market value is the diminished value. These figures are illustrations only, not typical amounts.
How does Arkansas measure damage to a car?
Arkansas measures damage to a motor vehicle as the difference between its value immediately before the damage and its value after, plus a reasonable amount for loss of use, under Ark. Code § 27-53-401. The Arkansas Supreme Court has applied that measure in several decisions.
The statute
As quoted by the Arkansas Supreme Court in Fryar v. Sanders, 301 Ark. 379 (1990), § 27-53-401 says that in all cases involving damage to motor vehicles, the measure of damages is the difference between the value immediately before and after the damage, plus reasonable loss of use. Fryar applied it to a destroyed car as well.
Repair cost can prove the value difference
In Zhan v. Sherman, 323 Ark. 172 (1996), the court said that when property is not a total loss, the difference in fair market value may be established by the reasonable cost of repair. Sipes v. Munro, 287 Ark. 244 (1985), allowed the amount paid in good faith for necessary repairs when other proof of market value is absent.
When repairs do not restore the value
In MFA Insurance Co. v. Citizens National Bank of Hope, 260 Ark. 849, a claim under an auto policy, the court held that when evidence shows repairs would not restore the car to its former market value, the before-and-after value measure can apply instead of repair cost. That is the core idea behind a diminished value claim.
Your own opinion of value counts
Zhan also notes that the Arkansas Supreme Court has consistently allowed an owner to testify to the value of their own damaged property. Dealer appraisals and comparable listings from Bentonville, Rogers, Springdale and Fayetteville make that opinion far stronger.
What we did not find
We did not find an Arkansas appellate decision that addresses a third-party claim for value lost after a complete, proper repair, or an Arkansas statute or rule that sets a formula for diminished value. How the measure applies to your car depends on the evidence. For a disputed claim, talk with an Arkansas attorney.
Is a diminished value claim against the other driver different from one on my own policy?
Yes. A third-party claim asks the at-fault driver’s insurer to pay damages its customer owes you. A first-party claim asks your own insurer to pay under your policy’s terms. The rules that set the amount are different.
| Question | Claim against the at-fault driver’s insurer | Claim on your own auto policy |
|---|---|---|
| What sets the amount | The legal measure of damages, the before-and-after value difference plus loss of use (§ 27-53-401) | Your policy’s limit of liability for collision or comprehensive |
| Your deductible | Not applied to a liability payment | Applies, and your insurer may seek it back from the other side |
| Is lost value included | It can be part of the damages, if you prove it | Depends on the wording; many policies pay the lesser of actual cash value or the cost to repair |
| Who you deal with | The other driver’s adjuster, as a third-party claimant | Your own adjuster, as a first-party claimant |
| If the at-fault driver is uninsured | No liability coverage to claim against | Uninsured motorist property damage, if you bought it, subject to a $200 deductible (§ 23-89-404) |
Does my own auto policy pay diminished value in Arkansas?
It depends on the policy wording and on whether the repair restored the car. Collision and comprehensive coverage commonly pay the lesser of the car’s actual cash value or the amount needed to repair or replace it, less your deductible. Whether lost value is owed turns on your policy’s exact wording and whether the repair restored the car, so read the limit of liability section and ask your adjuster in writing.
Read the limit of liability
Look for how the policy measures a partial loss: repair cost, actual cash value, or both, and whether it mentions diminution in value at all. Our guide to types of car insurance explains what collision and comprehensive cover.
Repairs that fall short
The MFA decision dealt with a policy and a car that repairs could not restore. If your repaired car does not perform or look as it did, document that first. It is a stronger starting point than resale value alone.
Using your policy while you wait
You can file under your own collision coverage to get repairs moving and pursue lost value from the at-fault driver separately. Under Rule 43 section 10(d), your insurer must include your deductible in its recovery demand and share recoveries with you proportionately.
How do you document and present a diminished value claim in Arkansas?
A diminished value claim is only as good as its evidence. Gather it while the repair is fresh, and put everything in writing to the at-fault driver’s insurer.
- Keep the full repair record.
Get the final repair invoice, photos before and after, and a list of parts replaced. Note any frame, structural or airbag work, because those details can affect resale value.
- Prove the value before the crash.
Save the window sticker, service records, mileage and listings for comparable cars for sale in Northwest Arkansas around the date of the accident.
- Get a written opinion of value after repair.
Ask one or two dealers or an independent appraiser to state in writing what the repaired car would bring, and why. A dated, signed opinion carries more weight than a phone quote.
- Send a written demand to the at-fault driver’s insurer.
State the before value, the after value, the difference, and your loss of use, with copies of the evidence. Ask for a written response.
- Read any release before you sign it.
A release can end your right to ask for more later, including lost value. If the insurer is negotiating with you directly and you have no attorney, Rule 43 section 9(d) requires at least 60 days’ written notice before a time limit that could affect your rights expires.
- Ask an attorney if the insurer refuses.
Deadlines and the strength of the evidence matter. An Arkansas attorney can tell you whether the gap is worth pursuing further.
When is a diminished value claim worth pursuing?
A diminished value claim is often worth pursuing when the car is newer or valuable, the damage was serious, you were not at fault, and you can get written evidence of the value gap. It is often not worth it when the car is older, the damage was cosmetic, or the cost of proving it is close to the likely gap.
Newer and higher-value vehicles
The larger the car’s value before the crash, the more room there is for a meaningful gap. A late-model truck or SUV with structural repairs is a different case from a ten-year-old sedan with a new bumper.
Serious or structural damage
Frame, unibody and airbag repairs can matter more to buyers than a replaced panel. Ask the repair shop to describe the work clearly on the invoice.
You plan to sell or trade soon
If you will trade the car in within a year or two, a dealer’s written trade-in offer that reflects the accident is some of the most direct evidence you can get.
The other driver’s limits
Lost value and repairs are both property damage, so they generally share the other driver’s property damage liability limit. If those limits run out, the rest is a harder conversation. See what happens when a claim exceeds the other driver’s limits.
We will help you see what your policy pays and what the other side may owe.
Cribb Insurance Group is an independent agency in Bentonville. We are not attorneys, and we do not adjust claims, but we can read your auto policy with you, explain what your collision, uninsured motorist and rental coverage pay while the other driver’s claim moves, and help you put your questions to the adjuster in writing. If your coverage left a gap, we can compare options from multiple insurance companies before your next renewal.
Ask Cribby about diminished value claims
Cribby is Cribb Insurance Group’s AI assistant for general insurance questions. Start with one of these, or ask your own. For your own policy, talk with our team.
Want to see what your current policy says? Upload your auto declarations page to Coverage Compare to see whether you carry collision, uninsured motorist property damage and rental reimbursement, the coverages that decide what your own policy pays while you pursue the other driver’s insurer.
Use Coverage CompareDiminished value questions
Can I get diminished value after a car accident in Arkansas?
You can ask for it. Arkansas measures damage to a motor vehicle as the difference in value immediately before and after the damage, plus reasonable loss of use, under Ark. Code § 27-53-401. A claim against the at-fault driver’s liability coverage is where a lost resale value claim can be made. Whether it is paid depends on your evidence and the insurer’s response.
Does my own insurance company pay diminished value?
It depends on the policy wording and on whether the repair restored the car. Collision and comprehensive coverage commonly pay the lesser of actual cash value or the cost to repair or replace, less your deductible. An Arkansas Supreme Court case, MFA Insurance Co. v. Citizens National Bank of Hope, applied a before-and-after value measure where repairs could not restore the car. Read your policy’s wording.
How is diminished value calculated?
We did not find an Arkansas statute or rule that sets a formula. The legal measure is the difference in market value before and after the damage. In practice, that means evidence: the car’s value before the crash from comparable listings and records, and written opinions from dealers or an independent appraiser of what the repaired car would bring.
Can I also claim loss of use?
Yes, as a separate item. Ark. Code § 27-53-401 adds a reasonable amount for loss of use of the vehicle to the change in value, and the Arkansas Supreme Court applied loss of use even to a destroyed vehicle in Fryar v. Sanders. Rental receipts are the clearest evidence. If you carry rental reimbursement, your own policy may pay rental costs while the claim is pending.
What if the driver who hit me is uninsured?
There is no liability policy to claim against. Uninsured motorist property damage, if you bought it with uninsured motorist bodily injury, can respond to damage caused by an uninsured driver, subject to a $200 deductible under Ark. Code § 23-89-404. Whether it includes lost value depends on the policy. Our uninsured motorist guide explains the coverage.
How long do I have to make a diminished value claim in Arkansas?
Report the crash and open the claim promptly, and send your diminished value demand once the repair is finished. Deadlines to sue depend on the type of claim and the facts, so ask an Arkansas attorney rather than relying on a general number. If an insurer negotiates with you directly, Rule 43 requires written notice before a time limit that could affect your rights expires.
Does a totaled car have diminished value?
No. When a car is a total loss, the insurer pays its value rather than repairing it, so there is no repaired car to lose resale value. The questions then are whether the payment reflects the car’s value and includes required taxes and fees. See our totaled car settlement guide.
Sources we checked for this guide:
- Fryar v. Sanders, 301 Ark. 379 (1990), quoting Ark. Code § 27-53-401
- Zhan v. Sherman, 323 Ark. 172 (1996)
- Sipes v. Munro, 287 Ark. 244 (1985)
- MFA Insurance Co. v. Citizens National Bank of Hope, 260 Ark. 849
- Ark. Code § 23-89-404, uninsured motorist property damage (Justia, 2025)
- Arkansas Rule 43, Unfair Claims Settlement Practices (Cornell LII)
- Texas Department of Insurance Bulletin B-0027-00 on diminished value (how a regulator reads standard policy terms)
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