I bought a 2024 Toyota RAV4 for $35,000. After one year of full-time Uber driving, I had put 60,000 miles on it. When I tried to trade it in, the dealer offered me $18,000. I asked my insurance agent if I could claim the “lost value” since I paid for commercial coverage. He looked at me like I was crazy.
Key Takeaways
- Insurance Fixes Damage, Not Value: Auto insurance is designed to repair physical damage from accidents. It does not cover the financial loss of putting 50k miles a year on a car.
- “Betterment” Clauses: If a repair (like a new engine) actually increases the car’s value, the insurer might make you pay the difference. They never pay you for high mileage wear.
- Diminished Value Claims (DIV): These only apply if someone else hits you and the accident history lowers your resale value. You cannot claim DIV on your own policy for your own driving.
- The Tax Write-Off: The only way to recoup depreciation is through the IRS Standard Mileage Deduction (approx. 72 cents/mile in 2026).
The “Why”: The Wear and Tear Exclusion
Every auto policy has a section called “Exclusions.” One of the first items is “Wear and Tear, Freezing, Mechanical Breakdown.”
High mileage is essentially accelerated wear and tear.
If insurance paid for depreciation, every Uber driver would get a check for $5,000 a year. The system would collapse. You are “consuming” the asset to make money; that is a business expense, not an insurable loss.
[IMAGE: Chart showing the depreciation curve of a personal car vs. a gig car over 2 years]
The Investigation: Can You Recover Value?
I spoke to a forensic auto appraiser about when you can get money for lost value.
1. First-Party Claim (Your Insurance)
- Scenario: You hit a pole. Car is fixed.
- Depreciation Payout: $0. In almost all states (except maybe GA), you cannot claim diminished value against your own insurer.
2. Third-Party Claim (They Hit You)
- Scenario: A truck hits you. You are 0% at fault.
- Depreciation Payout: Possible. You can file a “Diminished Value Claim” against their insurance, arguing that your car is now worth less because it has an accident on the CarFax.
3. Gap Insurance
- Scenario: Car totaled with 100k miles.
- Payout: Gap covers the loan difference. It protects you from the depreciation gap only if the car is totaled, not while you are driving it.
Comparison Table: Who Pays for Depreciation?
| Source | Coverage |
| Auto Insurance | NO (Excludes wear & tear) |
| IRS (Taxes) | YES (via Mileage Deduction) |
| Warranty | NO (Repairs only) |
| You | YES (Resale value loss) |
Step-by-Step Action Plan
- Track Every Mile: Use an app like Stride or Gridwise. In 2026, the deduction is your biggest shield against depreciation.
- Sell Early or Drive to Death: There are two strategies. Sell before 50k miles (while value holds) or drive it until the wheels fall off (value is $0 anyway). The middle ground is where you lose the most money.
- Don’t Lease: Leasing a gig car is a nightmare because of the mileage penalties (often 25 cents/mile over the limit).
FAQ
If I get a new paint job, does insurance pay for it?
Only if it’s damaged in an accident. They won’t pay to repaint a hood chipped by highway miles.
Does “New Car Replacement” cover high mileage?
Some policies offer this. If you total the car within 1 year, they buy a new one, regardless of the mileage. This is one of the few hacks to beat depreciation if you have a total loss.