How the 17c formula works, and what it leaves out

17c is a worksheet, not a state code section you can look up in every state. It became widely known through State Farm's handling of diminished value in Georgia, including the Mabry litigation. A Georgia trial court approved State Farm's use of the formula for the settlement class and for later Georgia first-party assessments, unless the law changed or an accepted policy said otherwise. The Georgia Insurance Commissioner said in a December 1, 2008 directive that the department has never endorsed a formula and that insurers should stop implying otherwise.

The arithmetic is short. Take a pre-loss retail value. Ten percent of that number is the base. Multiply by a damage modifier from 0 to 1: 1.00 for severe structural damage, 0.75 for major damage to structure and panels, 0.50 for moderate, 0.25 for minor structural damage, and 0.00 when there is no structural damage and panels were replaced. Then multiply by a mileage modifier: 1.0 under 20,000 miles, 0.8 from 20,000, 0.6 from 40,000, 0.4 from 60,000, 0.2 from 80,000, and 0 at 100,000.

A worked example, labeled as one

Take a hypothetical car worth $20,000 with 32,000 miles and moderate damage. Base loss is $2,000. The mileage step is 0.8. The damage step is 0.5. The product is $800. Change the mileage to 110,000 and the same formula returns $0, because the mileage step is zero. Change the damage to 'panels replaced, no structure' and the damage step is zero, so the result is also $0.

Those zeros are the part owners argue about. A car with six figures on the odometer can still be worth less after a heavy hit. A bumper and a fender, properly replaced, can still show up on a history report. The formula's authors treated some of those cases as no loss. Reasonable people disagree, and the Commissioner's directive says a single formula is not the last word.

The criticisms that keep coming up

The 10 percent base is a ceiling. Nothing in the multiplication can exceed a tenth of the pre-loss value, and both modifiers are usually below 1, so the result is often a few hundred dollars on a car with a five-figure repair.

Mileage is counted twice if the guidebook value already adjusted for miles. The damage step is a judgment call, and the classic write-up of the formula says not to use the repair cost to make that call. Buyers do use the repair cost. They ask how bad it was.

The formula does not require anyone to look at the car. A file review has the same limit. The difference is whether the report says so.

Alden's paid report prints the 17c cross-check and a separate opinion that uses the repair dollars and does not treat 10 percent as a cap. The opinion is what the demand letter asks for. The cross-check is there so an adjuster can see it was not ignored. Neither number is a statute.