Diminished value on leased and financed vehicles

Financed vehicles

With a loan, the title is yours and the lender holds a lien until the loan is paid. A diminished value claim against the at-fault driver’s insurer is generally the owner’s claim. The loss is real for a financed owner in a specific way: the loan balance stays the same while the vehicle securing it is now worth less, which can leave you owing more than the vehicle would sell for.

Two practical points:

• Some insurers name the lienholder on property-damage payments. Ask the adjuster how a diminished value payment would be issued.
• Your loan agreement may say how insurance proceeds are handled. Check it, or ask the lender.

Leased vehicles

With a lease, the leasing company is the owner. Whether you can bring a diminished value claim yourself depends on the lease and on your state. Leases handle this in different ways:

• Some give the leasing company the right to any payment for loss of value.
• Some leasing companies will authorize the lessee in writing to pursue the claim, or assign it.
• Some leasing companies pursue the claim themselves, or do not pursue it at all.

Ask the leasing company, in writing, who may claim and who receives any payment. Keep the answer with your claim file. An insurer may ask for it before it will discuss a claim from a lessee.

How a lessee can still be affected

Even though the leasing company owns the vehicle, the accident can cost the lessee money:

• At turn-in. The leasing company may charge for damage, repair quality or excess wear.
• At buyout. If you buy the vehicle at the end of the lease, you pay the agreed residual for a vehicle that now has an accident history.
• At an early trade. A dealer valuing the vehicle to pay off the lease will take the accident history into account.

For disputes over turn-in charges, a lease termination appraisal documents the vehicle’s condition and value.

What to gather before a claim review

• The lease or loan agreement, including any section on insurance proceeds or damage
• Any written answer from the lender or leasing company about who may claim
• The final repair invoice and photos
• The at-fault insurer’s claim number and adjuster contact

Tell us at the start if the vehicle is leased. Leased vehicles are not eligible for our Conditional Money-Back Guarantee; the full terms list every condition.