To avoid computational burden, diagonal variance covariance matrices (VCM) are preferred to describe the stochasticity of terrestrial laser scanner (TLS) measurements. This simplification neglects correlations and affects least-squares (LS) estimates that are trustworthy with minimal variance, if the correct stochastic model is used. When a linearization of the LS functional model is performed, a bias of the parameters to be estimated and their dispersions occur, which can be investigated using a second-order Taylor expansion. Both the computation of the second-order solution and the account for correlations are linked to computational burden. In this contribution, we study the impact of an enhanced stochastic model on that bias to weight the corresponding benefits against the improvements. To that aim, we model the temporal correlations of TLS measurements using the Matérn covariance function, combined with an intensity model for the variance. We study further how the scanning configuration influences the solution. Because neglecting correlations may be tempting to avoid VCM inversions and multiplications, we quantify the impact of such a reduction and propose an innovative yet simple way to account for correlations with a “diagonal VCM.” Originally developed for GPS measurements and linear LS, this model is extended and validated for TLS range and called the diagonal correlation model (DCM). © 2020, The Author(s).