Detailed answer — how the diminished value process works when you are not the titled owner

Diminished value is the drop in a vehicle’s market value after it’s damaged in a collision, even after repairs. In Indiana, the ability to recover diminished value depends first on who holds a legal property interest in the car. That matters because the right to claim a loss to property generally belongs to the owner (the person or entity on the title) or anyone with a recognized financial interest (for example, a lienholder).

Who normally has the right to claim diminished value?

• Title holder / owner: The titled owner has the clearest right to claim diminished value. An insurer that pays that owner may pursue subrogation against the at-fault party.
• Lienholder (finance company): A bank or finance company that holds a security interest can protect its economic interest. It usually receives payments toward the loan balance rather than market value compensation for the borrower.
• Lessee (leased vehicle): The lessor (leasing company) typically owns the vehicle and appears on the title. A lessee (person driving under a lease) usually cannot directly recover diminished value from the at-fault driver’s insurer unless the lease or state law provides a remedy. However, a lessee can suffer out-of-pocket losses (early termination fees, loss of manufacturer incentives, higher residual charges) that may form the basis for a claim if those losses are identifiable and caused by the accident.
• Employer-owned or rental vehicles: If an employer or rental company owns the vehicle, that owner has the primary claim. A driver who is not the owner must usually get the owner’s permission to pursue a claim.

Practical effect in Indiana

Because Indiana law treats property claims as rights of the property owner or those with a recognized financial interest, you as a driver who is not the owner will normally need one of the following to pursue diminished value:

1. Written authorization from the titled owner allowing you to act on their behalf; or
2. Evidence that you have a direct financial loss (for example, lease-end charges or costs tied to early termination) that the at-fault insurer should reimburse; or
3. The owner chooses not to pursue the claim and assigns their rights to you in writing.

How the insurance claim process usually works

1. Identify the titled owner and any lienholder. The title and financing documents show legal interests.
2. Notify the at-fault driver’s insurer and the vehicle owner’s insurer as appropriate. If you are not the owner, tell the owners (leasing company, bank, employer) immediately; many leases and finance agreements require prompt notice.
3. Obtain repair estimates and documentation of pre-loss value (comparable listings, NADA, KBB, dealer quotes, vehicle history reports).
4. If the titled owner wants diminished value paid to them, they submit a demand to the at-fault insurer with documentation: repair bills, before/after photos, and market-comparison evidence.
5. If the owner refuses or you have a separate out-of-pocket loss (e.g., lease penalties), prepare a written demand showing the specific economic loss and ask the at-fault insurer to pay that loss.
6. If negotiations fail, consider appraisal (if available under the policy), mediation, or filing suit. Indiana imposes time limits for lawsuits, so act promptly.

Examples (hypothetical)

Scenario A — Leased car: Jane leases a BMW. A negligent driver hits the car. The leasing company (title holder) arranges repairs. At lease end, Jane would face excess-damage charges if the vehicle’s market value is lower than the contract residual. Jane can demand the at-fault insurer reimburse her documented lease-end charges or ask the lessor to pursue diminished value and then seek reimbursement.

Scenario B — Financed car: Luis finances a Toyota. The bank is the lienholder; Luis is the titled owner. Luis may file a diminished value claim directly because he holds title, but any insurance payment may go to the lienholder if the lender’s interest appears on the title or loan agreement.

Common insurer responses

• Pay for repairs only and refuse a diminished value payment to a non-owner.
• Pay diminished value to the titled owner, not the driver who does not hold title.
• Offer to settle loss of use, rental, or specific out-of-pocket lease penalties if documented and causally linked to the accident.

Subrogation and assignments

If an insurer pays the owner for repairs or diminished value, the insurer may acquire subrogation rights against the at-fault driver. Conversely, a titled owner can assign their claim to another person (for example, the lessee or a repair shop) in writing; after assignment, the assignee can pursue recovery.

When you likely need a written authorization or assignment

• You are the regular driver but not on the title.
• The vehicle is employer- or rental-owned and you want to collect any residual out-of-pocket loss.
• The owner will not cooperate in submitting a diminished value demand.

In short: the titled owner/party with a legal interest normally has the primary right to diminished value in Indiana. If you do not own the car, secure written authority or show a direct, compensable financial loss tied to the accident.

Helpful hints

• Identify the titled owner and any lienholder immediately. Check the registration and title or ask the vehicle owner.
• Notify the owner’s insurer and the owner (lessor/finance company) right away. Leases and finance agreements often require prompt notice.
• Get a written authorization or a signed assignment from the owner if you will act on their behalf.
• Document pre-loss value: collect comparables (KBB, NADA, dealer listings), photos of the vehicle before/after the crash, and vehicle history reports.
• Keep all repair estimates, receipts, rental invoices, and correspondence with insurers and the leasing/finance company.
• If you’re a lessee, document lease-end statements, early termination fees, and any additional charges you expect because of the accident.
• Ask the at-fault insurer if they have a diminished value claim form and whether they will accept a direct demand from a lessee for documented lease-related losses.
• Act promptly. Indiana imposes time limits on lawsuits for property damage, so begin the process early and confirm deadlines with a lawyer if you expect litigation.
• Consider mediation, arbitration, or small claims court if the owner or insurer refuses a reasonable demand and the amount is within court limits.
• If the owner refuses to cooperate and you suffered measurable out-of-pocket loss, consult a lawyer to evaluate whether you have an independent claim.

Indiana resources

• Indiana Department of Insurance: https://www.in.gov/idoi/
• Indiana General Assembly (laws and statutes): https://iga.in.gov/

When to consider legal help

Talk to an attorney if the owner won’t cooperate, the insurer denies a reasonable claim, or your documented economic losses (lease penalties, early termination fees, or other out-of-pocket costs) are significant. An attorney can advise on how to obtain assignments, enforce subrogation rights, or pursue court remedies.

Disclaimer: This article provides general information about Indiana law and common insurance practices. It is not legal advice. For advice specific to your situation, consult a licensed Indiana attorney.