FAQ: How does the diminished value process work if I do not own my car? (South Dakota)

Short answer: In South Dakota the right to a diminished value recovery generally belongs to the vehicles owner (the titled owner or lessor). If you do not own the car (for example, you lease it, it is financed, or its a company or rental vehicle), you usually cannot unilaterally demand diminished value payment unless the owner authorizes you or the owner makes the claim. You can, however, help gather evidence, authorize the owner to pursue the claim, or, in some situations, pursue a claim on the owners behalf with their written permission.

Detailed answer — How the process commonly works in South Dakota

Below is a step-by-step explanation using common facts. Imagine you were driving a leased 2019 sedan that another company owns and you were involved in a collision where another driver was clearly at fault. The car was repaired, but its market value dropped because it now has an accident history. Here is how diminished value usually plays out:

1. Who has the right to claim diminished value?

   In South Dakota the claim for diminished value normally belongs to the vehicles owner—the person or company listed on the title. For leased vehicles that is the lessor. For financed vehicles the buyer and the secured lender both have legal interests (the lender holds a lien). If you are only the driver or lessee, you usually must get the owners permission for them to pursue the diminished value claim or to assign the claim to you.

2. First-party vs third-party claims

   If you file a claim with your own collision coverage, most South Dakota insurers will pay to repair (or total) the vehicle but generally do not pay diminished value unless your policy specifically covers it. If another driver is at fault, you (or the titled owner) can demand full property-damage compensation from the at-fault drivers insurer. That compensation can include the diminished market value in addition to repair costs.

3. Proving diminished value

   To present a diminished value claim you need evidence showing the vehicles fair market value immediately before the crash and after repairs. Typical evidence includes:

   • Pre-accident valuation: comparable listings, NADA/Kelley Blue Book estimates, dealer quotes.
   • Post-repair valuation: independent appraisal that considers accident history, vehicle history report (e.g., Carfax), and market comparisons.
   • Repair invoices and photos showing the damage and repairs.

   Example: a car had a pre-accident market value of $15,000. After repairs and with an accident record, comparable cars sell for $13,000. The diminished value would be $2,000.

4. Submitting the claim

   The titled owner (or an authorized representative) sends a demand package to the at-fault partys insurer with: a short demand letter, appraisal showing diminished value, repair invoices, and ownership documentation or an assignment/authorization letter if someone other than the owner is submitting the claim. If you are not the owner, get a signed authorization from the owner that either (a) assigns the diminished value claim to you or (b) authorizes you to act on their behalf when negotiating with the insurer.

5. Insurer response and negotiation

   The at-fault insurer may accept the demand, make a counteroffer, or deny the claim. Keep all communications in writing. If the insurer offers payment, confirm who gets paid (owner, lienholder). If the insurer pays the owner, lienholders may have a right to be paid first to satisfy the lien.

6. If the insurer denies or lowballs the claim

   Options include negotiating further, hiring a qualified diminished-value appraiser, filing a complaint with the South Dakota Division of Insurance, or pursuing a civil claim. If the owner wants to sue, a small-claims or civil lawsuit is possible depending on the dollar amount. If you are not the titled owner, the owner must be the plaintiff or assign the claim to you.

7. Special considerations for leased, financed, or rental cars
   • Leased vehicle: The lease contract often obligates the lessee to return the car in specified condition and may require you to pay for excess wear or diminished value when you return the vehicle. The lessor (title holder) makes the insurance claim unless the lease assigns claim rights to you.
   • Financed vehicle: The buyer is often listed as owner but the lender has a lien. If an insurer pays diminished value, the owner typically receives it; the lender may assert a lien interest in settlement proceeds, so check the financing statement and loan payoff terms.
   • Rental vehicle: Rental companies are the owners and can claim diminished value. If you were driving the rental, the rental company usually handles claims and may hold you responsible under the rental agreement.

South Dakota legal resources

There is no single South Dakota statute labeled “diminished value”. However, diminished value claims arise within the insurance and motor vehicle framework. Useful official resources:

• South Dakota Codified Laws, Title 58 (Insurance): https://sdlegislature.gov/Statutes/Codified_Laws/58
• South Dakota Codified Laws, Title 32 (Motor Vehicles): https://sdlegislature.gov/Statutes/Codified_Laws/32
• South Dakota Department of Labor & Regulation, Division of Insurance (consumer help and complaints): https://dlr.sd.gov/insurance/

Practical steps if you do not own the car but want diminished value recovered

1. Confirm ownership on the title and any lease or financing documents.
2. Ask the owner to make the claim or sign a written assignment/authorization letting you negotiate on their behalf.
3. Collect evidence: pre-accident value data, repair invoices, photos, and a vehicle history report.
4. Get an independent diminished value appraisal from a qualified appraiser.
5. Send a demand package to the at-fault insurer. Include authorization if you are not the owner.
6. If the insurer refuses to pay fair value, consult the South Dakota Division of Insurance or discuss filing suit with a local attorney or in small claims court.

How damages are paid

If the titled owner recovers diminished value, the payment will ordinarily go to the owner. If a lender has a lien, the owners settlement may be used to satisfy that lien before the owner receives any balance. If the owner assigns rights to you in writing, the insurer can pay the assignee according to that assignment.

When to get legal help

If the insurer denies liability, disputes ownership of the claim, or refuses to negotiate, consider consulting a lawyer who handles property-damage or auto cases. If the potential recovery is small, a small-claims action may be practical. If the amount is substantial or the lien question is complex, legal advice helps protect your rights.

Disclaimer

This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Laws change and facts matter. For advice about your specific situation, contact a licensed attorney in South Dakota or the South Dakota Division of Insurance for consumer assistance.

Helpful Hints

• Always check the vehicle title or lease to confirm who has the legal right to make the claim.
• Get written authorization from the owner if you will negotiate or accept payment for diminished value on their behalf.
• Use independent appraisers who provide a clear before-and-after valuation and explain methodology.
• Keep repair invoices, photos, and all written communications with insurers organized and dated.
• If you have a leased vehicle, review the lease for clauses about damage and diminished value obligations.
• Contact the South Dakota Division of Insurance if you think an insurer acted unfairly: https://dlr.sd.gov/insurance/
• Keep expectations realistic: not all diminished value demands succeed; strong documentation improves results.