The 17c diminished value formula

Where the 17c formula comes from

It comes from a Georgia court file, not from a statute — and not from the case nearly every article about it names. Two Georgia cases sit behind the formula, and they do different jobs.

The duty came from State Farm Mut. Auto. Ins. Co. v. Mabry, 274 Ga. 498 (2001). The Supreme Court of Georgia held that value, not condition, is the baseline for measuring loss under the auto policies at issue, so the insurer has to assess diminution in value. Days later, on December 7, 2001, Georgia's Insurance Commissioner directed property and casualty insurers in the state to adjust claims by including assessment and payment of diminution of value relative to physical damage (Directive 01-P&C-1). Mabry created the duty. It set out no formula.

The formula and the name came from Walker v. American National General Ins. Co., Muscogee County Superior Court, Civil Action No. SU-03-CV-2058 — a later class action, filed in 2003, against a group of Georgia insurers rather than one company. The formula sits in paragraph 17(c) of the second injunction in that case, and that paragraph number is the entire reason anyone calls it 17c.

That is not our reading of a file nobody can see. The Georgia Court of Appeals states it in as many words: “The so-called ‘17 (c)’ formula is named after paragraph 17 (c) of the second injunction issued in the class action styled Myron G. Walker, Individually and On Behalf of All Others Similarly Situated v. American National General Insurance Company … (Muscogee County Superior Court Civil Action No. SU-03-CV-2058).” — Amica Mut. Ins. Co. v. Sanders, 335 Ga. App. 245 (2015).

Most pages you will find about 17c say it came from Mabry, or that State Farm wrote it. Both are wrong, and the record above is public.

What the order actually says about its own formula

The same opinion quotes the paragraph. Three things in it are worth knowing before an adjuster quotes you a 17c number.

• The damage severity modifier — the number that usually decides how small your figure ends up — is described in the formula itself as a subjective decision, which must be made by the adjuster, one that can be adjusted as necessary to fit the damage.
• The formula says it provides a good figure on which to base a loss of value claim while adding that there are many circumstances that will require additional consideration in determining the loss of value, prior damage and dealer ownership among them. The formula's own text treats itself as a starting point.
• The 2004 settlement order in Walker required the insurers in that case to keep using 17c for losses reported after June 30, 2003, and said that insurers using it could not be found to have acted in bad faith by virtue of using the formula. That protection is one reason the habit stuck.

The three steps

Step 1 — the 10 percent ceiling. Take your car's market value just before the accident and multiply it by 10 percent. Whatever happens next, the formula can never pay more than that.

Step 2 — the damage multiplier. Multiply the ceiling by a number for how severe the repair was.

Step 3 — the mileage multiplier. Multiply again by a number based on the odometer.

The multipliers stack

The published opinion quotes the paragraph's wording, not its tables. The bands above are the ones insurers actually apply: the damage bands match an insurer damage-modifier job aid filed in a public court record, and the mileage bands are the standard schedule that zeroes out at 100,000 miles.

Those two multipliers stack. A moderate repair on a car with 45,000 miles keeps 0.50 × 0.60 = 30 percent of a ceiling that was already only a tenth of the car's value.

A worked example

Here is one of our sample cases, start to finish. This is an example from a sample report, not a promise.

A 2022 Toyota RAV4 XLE Premium in Corpus Christi, 42,468 miles, hit in the rear. The rear bumper cover was replaced and refinished, two further panels were replaced, and the forward sensors were recalibrated. No structural work. Repairs came to $7,200. Market value before the crash: $29,582.

The 17c answer is $887 — on a repair that cost $7,200.

Our own estimate for the same car was $2,200 to $3,300, with a point estimate of $2,750 — a gap of $1,863. The formula never looks at the two things that produced that difference: the repair was 24 percent of the car's value, and the accident-history listings we compared were priced 1.9 percent below clean ones after adjusting for year and mileage. Again, example figures from a sample report, not a promise about your car.

1. Ceiling: $29,582 × 10% = $2,958
2. Damage: moderate panel damage → × 0.50 = $1,479
3. Mileage: 42,468 miles → × 0.60 = $887

What the formula ignores

The three inputs are all it uses. Six things it never sees are usually the six things that decide what a claim is actually worth.

1. Your actual market. The 10 percent ceiling is the same whether buyers in your area shrug at accident history or run from it. Real listings for cars with a record are the evidence 17c leaves out entirely.
2. The mileage cliff. At 100,000 miles the multiplier is 0.00, so the formula returns zero — no matter how bad the repair was, and no matter that buyers still pay less for that car.
3. The zero at the bottom of the damage table. A repair with no structural or panel work scores 0.00 and pays nothing, even when the accident is plainly on the history report.
4. How rough the buckets are. Two repairs that cost thousands of dollars apart can land in the same 0.50 bucket.
5. Everything about the car that is not miles. Age, trim, how well it holds value, whether the repair used original parts, whether there was already an accident on the record.
6. What the repair actually involved. Welded panels, frame work, airbag replacement and safety-sensor recalibration are the things buyers ask about, and none of them change the 17c answer on their own.

Is a 17c number wrong?

Not automatically. Sometimes it is close. On a nearly new car with severe structural damage, both multipliers sit at 1.00 and the formula pays its full 10 percent, which can be a fair opening number.

The problem is that it is one fixed shape applied to every car. It cannot go above 10 percent, and it slides to nothing as the odometer climbs. That is fine as a first offer. It is thin as the last word.

If an insurer sends you a 17c figure, you do not have to argue about the formula. You can put a different measure in front of them: what your car was worth, what the repair involved, and what the market pays for cars carrying that record.