FAQ — Diminished Value When You Do Not Own the Car (Arkansas)

Detailed Answer

Short answer: who can pursue a diminished value claim depends on who has a property interest in the vehicle. In Arkansas, the legal right to claim diminished value typically belongs to the vehicle owner or another party with a documented ownership interest (for example, a secured lender or the lessor in a lease). If you do not own the car, your ability to make a diminished value claim is limited unless you have written authority from the owner or you are acting on behalf of someone who holds a legal interest in the vehicle.

What is diminished value?

Diminished value is the loss in a vehicle’s market value after it has been damaged and repaired. Insurance companies and buyers often pay less for a vehicle with an accident history, even when repairs are done well. Diminished value claims attempt to recover that loss.

Who has the legal right to claim diminished value in Arkansas?

Titled owner: The registered/titled owner normally holds the primary right to claim diminished value. If the owner is not you, the insurance company will look to the owner to make the claim.
Lienholder or secured lender: If a bank or finance company holds a security interest on the title, the lienholder has a financial stake in the vehicle. Lienholders are entitled to be paid out of proceeds from an insurance settlement for physical damage before the owner receives any remaining funds. The lienholder may insist on how proceeds are applied, but in practice diminished value settlements are usually paid to the titled owner (with lienholder notice or participation as required by the loan contract and state law).
Lessee (leased vehicle): Lease contracts differ. Many leases require the lessee to maintain the vehicle and may give the lessor (owner) the exclusive right to insure and receive settlements. Some leases allow the lessee to pursue claims only with the lessor’s permission. Always check the lease contract.
Non-owner drivers: If you were driving someone else’s car and it was damaged, you generally cannot make a diminished value claim because you do not own the property. You can, however, cooperate with the owner and help collect evidence or make a claim on the owner’s behalf if the owner authorizes you to do so in writing.

How the process generally works when you do not own the car

Identify the owner and any lienholder or lessor. If the vehicle is financed or leased, notify the finance company or lessor. They may have specific procedures and must often be named on any insurance payout.
The owner files the diminished value claim. The owner (or an authorized representative with power of attorney) typically submits the claim to the at-fault driver’s insurer or to their own carrier if pursuing an uninsured/underinsured claim.
Document pre-accident condition and repairs. Gather photos, maintenance records, vehicle history reports (Carfax, AutoCheck), and a detailed repair invoice. Independent diminished value appraisals or dealer quotes help support the claim.
Insurance investigation and offer. The insurer may evaluate inherent diminished value and offer a settlement. If the vehicle is financed, the insurer may issue payment to both owner and lienholder or require the lien be satisfied per the loan contract.
Disputes and negotiation. If the insurer denies or makes a low offer, the owner may negotiate, provide independent appraisals, or escalate to arbitration, small claims court, or civil court. If you are not the owner, you can assist but cannot file on your own unless authorized.

Special situations

Authorized agent or power of attorney: If the owner signs a power of attorney or a written authorization, you can act on their behalf to file and negotiate a claim.
Company cars and employer-owned vehicles: The employer (owner) controls the claim. An employee driving the car should report the accident and cooperate with the employer’s claim process.
Settlement paid to lienholder: When there is a lien, insurers sometimes pay the lienholder directly. The lienholder will apply proceeds toward the loan balance, and the owner receives any remainder. That can affect how diminished value recovery is handled.

Arkansas-specific considerations

Arkansas regulates insurance and motor vehicle matters through state statutes and administrative rules. Insurance consumer guidance is available from the Arkansas Insurance Department. For general statutory context, see Arkansas Code Title 23 (Insurance) and Title 27 (Motor Vehicles):

There is not a single Arkansas statute that neatly defines diminished value claims; they arise from property damage and insurance principles applied to the facts. If a claim becomes contested, common contract and tort rules (and the specific insurance policy language) will govern how a dispute is resolved.

Practical steps if you do not own the car but want to help pursue diminished value

Ask the vehicle owner for written permission to act or to share information with insurers.
Help collect photos, repair invoices, and pre-accident records.
Recommend an independent diminished-value appraisal to the owner.
If the owner refuses to pursue the claim, consider whether you have any contractual right (for example, under a lease or employer agreement) to ask them to pursue it.

When to get legal help: If the insurer denies liability, refuses to pay a reasonable diminished value amount, or there is a title/lien dispute preventing settlement, the owner may want to consult an attorney experienced in Arkansas consumer/insurance or property-damage claims. If you are not the owner, an attorney can advise whether you can be given legal authority to act on the owner’s behalf.

Disclaimer: This article is educational and informational only. It does not provide legal advice, and it does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Arkansas attorney.

Helpful Hints

Always identify who is the titled owner before filing a claim — the owner controls the diminished value claim unless they authorize you in writing.
If the car is financed or leased, notify the finance company or lessor immediately. Loan or lease contracts often contain required notice and payout procedures.
Gather strong pre-accident evidence: dated photos, maintenance records, and vehicle history reports matter more than informal statements.
Independent diminished-value appraisals from a reputable appraiser or dealership will strengthen your negotiation position.
Keep all repair invoices and estimate details. Low-quality repairs can increase diminished value and strengthen the owner’s claim.
Ask the owner to supply a signed authorization if you need to communicate with insurers on their behalf.
Use the Arkansas Insurance Department as a resource for consumer complaints and claim-handling standards: https://insurance.arkansas.gov/
If negotiations fail, the owner can consider arbitration, small claims court, or consulting an attorney about civil litigation — weigh cost vs. likely recovery.