Detailed Answer — How diminished value claims work in Michigan when you do not own the car
Short answer: In Michigan the legal right to recover diminished value usually belongs to the vehicle owner or any party that holds a legal interest in the vehicle (for example, a leasing company or a secured lender). If you do not own the car and you have no legal or contractual interest in it, you generally cannot directly recover diminished value. However, you may have other avenues to seek compensation—through the vehicle owner, through an assignment of rights, or by pursuing other damages against the at-fault driver.
What is diminished value?
Diminished value is the reduction in a vehicle’s market value after it has been damaged and repaired. It recognizes that repaired vehicles often sell for less than comparable undamaged vehicles.
Who can make a diminished value claim in Michigan?
- Owner of the vehicle: The title holder or registered owner generally has the strongest right to claim diminished value because they hold the property interest that suffered damage.
- Entity with a legal interest: A lessor (leasing company), a secured lender (lienholder), or someone who has a written assignment from the owner can usually assert a diminished value claim.
- Non-owner operators and borrowers: If you only drove, rented, or borrowed the car and do not hold title or a contractual ownership interest, you typically lack standing to recover diminished value directly. You can, however, ask the owner to present the claim, seek an assignment of the owner’s rights, or pursue other personal losses you suffered (such as damage to personal property or out-of-pocket expenses).
How the diminished value process usually works (step-by-step)
- Determine who has the right to claim: Confirm who is the legal owner and whether any lienholder or leasing company holds an interest. If you are not the owner, ask the owner to pursue the claim or to sign a written assignment of the claim to you.
- Document the damage and repairs: Collect police reports, repair invoices, parts receipts, and photos of the damage and of the completed repairs.
- Establish pre-accident market value: Use comparable sales, dealer pricing guides, and vehicle history reports to establish the vehicle’s likely value before the crash.
- Get an independent diminished value appraisal: Have a qualified appraiser or auto valuation service estimate how much market value the vehicle lost because of the accident and repairs.
- Present a demand to the at-fault driver’s insurer: The owner (or assignee) sends a written demand with supporting documentation asking for payment of diminished value. Include the appraisal, repair bills, photos, and a statement of ownership/interest.
- Negotiate or escalate: Insurers may offer a settlement. If the insurer denies the claim or offers an unsatisfactory amount, options include mediation, arbitration (if available), or filing a civil claim in court. Many owners litigate diminished value in small claims court when amounts are modest.
What to do if you don’t own the car
- Ask the owner to file a diminished value claim with the at-fault insurer. The owner’s insurer or the at-fault insurer is the normal defendant for diminished value.
- If the owner refuses, request a written assignment of the owner’s rights to you. A written assignment lets you step into the owner’s shoes and pursue the claim yourself.
- If the vehicle is leased or financed, the lease or loan contract and the lienholder’s interests dictate who can be paid. Often the leasing company or lender is the party to present claims or accept settlement proceeds.
- If you personally suffered damage (for example, to your personal property inside the vehicle) or incurred out-of-pocket costs, you may still have a direct claim against the at-fault driver for those specific losses even if you cannot claim the vehicle’s diminished value.
Timing and statute of limitations
In Michigan, most tort claims for property damage must be brought within the statutory limitations period for tort actions. For general guidance on Michigan limitations, see the Michigan Compiled Laws on statutes of limitations: MCL 600.5805. If you think you have a claim, act promptly: evidence fades, repair records can be overwritten, and legal deadlines may bar claims filed too late.
Practical points about working with insurers
- Insurers often dispute diminished value amounts; independent appraisals and strong documentation improve your negotiating position.
- Your own auto insurer may repair the vehicle under collision coverage and then pursue reimbursement (subrogation) from the at-fault insurer. If your insurer does this, they may also pursue diminished value on your behalf—but they will pursue the interests of the policyholder listed on the policy.
- Accepting a repair payment that covers only repair bills may not resolve a diminished value claim. Ask whether the settlement releases diminished value rights before signing any general release.
When to get help from a lawyer
Consider talking with a licensed Michigan attorney if: the diminished value amount is significant; the insurer denies liability; the owner refuses to pursue the claim; or complex title/lease/lien issues make it unclear who has rights. An attorney can explain whether a written assignment or filing suit is appropriate in your situation.
Related Michigan resources
- Michigan Legislature — statutes (general): legislature.mi.gov
- Michigan Department of Insurance and Financial Services (consumer insurance guidance): michigan.gov/difs
Disclaimer: This article is for general information only and is not legal advice. It does not create an attorney-client relationship. For advice about your specific situation, consult a licensed Michigan attorney.
Helpful Hints
- Immediately document the crash: photos, police report, contact info for witnesses, and repair estimates.
- Confirm the vehicle owner and any lienholder before pursuing diminished value.
- Keep all repair invoices and parts receipts; insurers rely heavily on repair documentation.
- Obtain an independent diminished value appraisal from a reputable appraiser experienced in Michigan claims.
- If the owner won’t pursue the claim, ask for a written assignment of the owner’s rights so you can make the claim yourself.
- Carefully read any settlement release before signing; a broad release can waive diminished value rights.
- Act quickly. Preserve records and start the claim soon to avoid losing evidence or running into time limits.