Getting into a car accident is stressful enough. Dealing with repairs, rental cars, and insurance adjusters can feel overwhelming. But what if I told you that even after your car is perfectly repaired, you could still be losing money? That loss is called diminished value, and if you’re the victim of an accident, you may be entitled to compensation.
So, who is actually eligible to file a diminished value claim? The answer is generally straightforward, but it has important nuances based on fault, ownership, and state law.
The Primary Claimant: The Not-At-Fault Owner
In the vast majority of cases, the person who can file a diminished value claim is the owner of the damaged vehicle who was not at fault for the accident.
This is considered a third-party claim, where you, the claimant, are seeking compensation from the liability insurance of the person who caused the damage (the at-fault driver).
Here’s why this matters:
- You Must Be the Victim: Diminished value is considered a property damage loss. Since the at-fault driver is legally responsible for the total loss of value, their insurance is typically the one that pays. If you were at fault, your own insurance policy’s collision coverage often excludes diminished value.
- The Loss Belongs to the Owner: The financial loss associated with diminished value (the lower resale/trade-in price) is a burden the owner bears when they eventually sell the car.
What if I Don’t Technically “Own” My Car?
This is where things get a little more complicated and depend on your financing arrangement:
1. Financed Vehicles (You have a Loan)
If you have an auto loan, you are the titled owner of the vehicle, and the bank or financing company is the lienholder.
- You Can File the Claim: As the owner, you are the one who files the diminished value claim.
- Lienholder Involvement: While you file the claim, the insurance company may legally be required to include the lienholder’s name on the settlement check. This is to protect the bank’s financial interest, but the money is ultimately intended to compensate you for the loss of the car’s market value.
2. Leased Vehicles
If you lease your vehicle, the leasing company (the lessor) is the titled owner.
- The Lessor Files the Claim: Generally, only the legal owner can pursue a diminished value claim. Therefore, the leasing company holds the right to the diminished value claim.
- Lessee’s Role: You, the lessee, often have a duty under your lease agreement to cooperate and assist the leasing company in pursuing the claim. In some cases, if you are charged for the diminished value upon returning the car, you may have the right to seek recovery from the at-fault party’s insurer. You should always check your specific lease contract.
State-by-State Variations: First-Party Claims
The rules discussed above cover the most common scenario (a third-party claim). However, state laws can introduce a major exception: First-Party Diminished Value Claims.
In a first-party claim, you seek compensation from your own insurance company, typically under your underinsured or uninsured motorist coverage.
- Rare, but Possible: While most states do not require insurance companies to pay for diminished value on a first-party claim (due to policy language focused on repair rather than value), a few states are exceptions.
- Georgia is a well-known example of a state that allows both first- and third-party diminished value claims under certain conditions.
The takeaway here is crucial: State law is the deciding factor. Your eligibility for any type of diminished value claim—and who you can file it against—can change depending on where you live.
Key Eligibility Checklist
If you’re considering a diminished value claim, ask yourself these three critical questions:
| Question | Requirement | Notes |
| 1. Were you at fault? | No | Claims are generally filed against the at-fault driver’s liability insurance. |
| 2. Do you own the car? | Yes (Financed counts) | The titled owner or their insurer has the right to the claim. |
| 3. Does your state allow it? | Yes | Almost all states recognize third-party diminished value claims, but rules vary on first-party claims, required documentation, and calculation methods. |
Final Thought: Don’t Leave Money on the Table
Diminished value is a real loss that shows up on vehicle history reports the moment an accident is recorded. If you were the victim of an accident, you should not be forced to bear the financial burden of a devalued asset.
Contact Acquire Auto today to get the help and expertise needed to recover what you are owed!
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Please consult with a qualified legal professional or insurance expert regarding your individual claim.
