Can I recover diminished value if I do not own the car? — Maryland FAQ

Short answer: In Maryland, the legal right to recover diminished value (the loss in market value after an accident and repair) normally belongs to the vehicle owner. If you do not own the car (for example, it is leased, financed with a lienholder, owned by an employer, or rented), you generally cannot recover diminished value unless the owner brings the claim or assigns their claim to you in writing. This article explains how the process works, what documents and steps matter, and practical options if you are the driver but not the title owner.

What is “diminished value”?

Diminished value is the reduction in a vehicle’s market value after it has been damaged in an accident and then repaired. Even professionally repaired cars can sell for less than equivalent undamaged cars because buyers may perceive higher risk. Diminished value claims try to compensate the owner for that gap between pre-accident market value and post-repair market value.

Who has the right to pursue a diminished value claim?

• Legal owner: The person or business listed on the title (the owner) has the primary right to claim loss in the car’s value. That includes lessors (leasing companies) and lienholders with certain rights.
• Lienholders and finance companies: A lender with a security interest (lien) has an interest in the vehicle, but lenders typically protect their interest by requiring collision/physical damage insurance. Whether a lender can directly claim diminished value depends on the contract and whether the lender suffered an out-of-pocket loss. Often the owner (borrower or lessee) must assert the claim or assign rights to the lender.
• Drivers who are not owners: If you are only the driver (employee, lessee without title rights, renter), you generally lack standing to demand diminished value from an at-fault driver’s insurer unless the owner agrees to pursue the claim or signs a written assignment of rights to you.

Common scenarios (hypothetical facts) and what typically happens

1. Leased car

Hypothetical: You lease a car; the car is hit by an at-fault driver. The leasing company (lessor) is the legal owner. Because the lessor owns the vehicle, the lessor is the party that typically can claim diminished value. Many lease contracts require the lessee to report damage and cooperate with claims. The lessee might be responsible under the lease for damage-related costs that reduce the lessor’s value, but the lessor would normally pursue diminished value or apply deductions at lease-end.

2. Financed car with a lienholder

Hypothetical: You financed the car and you are the titled owner, but the lender holds a lien. You (the titled owner) can pursue diminished value, but the lender’s lien may affect how settlement funds are handled. If the lender is the titled owner (rare), the lender may assert the claim. If you are not the titled owner, the lender alone may not pursue diminished value unless it can show a loss.

3. Employer-owned car

Hypothetical: Your employer owns the vehicle. The employer must decide whether to pursue diminished value or require you (the employee) to assign rights. Employers sometimes require employees to report and cooperate with claims.

4. Rental car

Hypothetical: A rental company owns the car. The rental company will handle any diminished value or repair claims; as the renter you would not have standing unless the rental agreement or owner assigns a claim to you.

Step-by-step: How the diminished value claim process works when you are NOT the owner

1. Identify the owner on the title: Confirm who is the legal owner. That person or entity generally has the claim.
2. Ask the owner to act or to assign: If you want compensation but are not the owner, ask the owner to submit the diminished value claim to the at-fault insurer. Alternatively, the owner can sign a written assignment transferring their claim to you so you can pursue recovery directly. Keep the assignment in writing and notarized if the insurer requests it.
3. Document the loss: Gather photos of damage, repair invoices, vehicle history (Carfax), receipts for repairs, and market evidence showing the car’s pre-accident value (comps, dealer quotes, valuation guides). An independent diminished-value appraisal helps support the amount claimed.
4. Submit a demand to the at-fault insurer: The owner or assignee sends a written demand for diminished value with supporting documents and the appraisal.
5. Negotiate or escalate: If the insurer disputes the amount, the owner/assignee can negotiate, request mediation, or file suit. If the dispute is small, Maryland District Court or small claims court may be an option; for larger losses, a civil suit may be necessary.
6. Consider subrogation or lien interests: If a first-party insurer (the owner’s insurer) pays for repairs, that insurer may pursue subrogation against the at-fault insurer to recover repair costs and potentially diminished value, depending on policy and law.

Practical evidence and valuation methods insurers expect

• Independent diminished-value appraisal (completed by a qualified auto appraiser).
• Pre-accident market values using comparable vehicles (location, mileage, trim).
• Repair invoices and photos showing quality of repairs and parts used.
• Vehicle history reports (e.g., Carfax) showing incident reports.
• Dealer or trade-in offers for similar undamaged vehicles.

Timing and deadlines

Act promptly. Insurance policies and courts have deadlines for filing claims and suits. In Maryland, many negligence-based property-damage claims are subject to a multi-year statute of limitations, so do not wait years to act. For official statute text and deadlines, consult the Maryland General Assembly website: https://mgaleg.maryland.gov. For consumer guidance about auto insurance and claims in Maryland, see the Maryland Insurance Administration: https://insurance.maryland.gov.

If the insurer refuses to pay or you hit a roadblock

• Ask the owner to provide a written assignment of the diminished-value claim to you.
• File a complaint with the Maryland Insurance Administration if you believe the insurer is acting in bad faith: insurance.maryland.gov.
• Consider small claims or civil court. See Maryland Courts information for filing claims in District Court: https://www.mdcourts.gov/district/civil/smallclaims.

When to talk to an attorney

Talk with a Maryland attorney if the diminished value is substantial, the owner refuses to cooperate, or the insurer denies the claim and you need to assign/mediate or sue. An attorney can help draft an assignment, negotiate with insurers, and evaluate whether a court claim is practical.

Disclaimer

This is general information about Maryland diminished value claims and is not legal advice. Laws change and every case depends on specific facts. Consult a licensed Maryland attorney if you need legal advice about your situation.

Helpful Hints

• Confirm ownership on the vehicle title before making any diminished-value demand.
• If you are not the owner, get the owner to sign a written assignment of the claim if you must pursue recovery yourself.
• Collect pre- and post-accident photos, repair invoices, and a vehicle history report to strengthen a diminished value demand.
• Obtain an independent appraiser who uses accepted valuation methods (comps, dealer quotes) rather than relying solely on insurer estimates.
• Keep copies of all correspondence with insurers, the owner, and repair shops.
• Contact the Maryland Insurance Administration for consumer help and complaint filing: https://insurance.maryland.gov
• For filing small claims in Maryland District Court, start with: https://www.mdcourts.gov/district/civil/smallclaims
• If a lender or lessor is involved, review the lease or loan contract for clauses about damage, repair, and deficiency responsibility.