Detailed Answer

What is “diminished value”?

Diminished value is the loss in a vehicle’s market value after it has been damaged and repaired. Even when repairs return a car to safe, drivable condition, buyers often pay less for vehicles that have a crash history or extensive repairs.

Who actually has the right to a diminished value claim?

The right to claim diminished value belongs to the party that has a legal property interest in the vehicle. That typically means:

• The registered owner on the title (common when the car is fully owned).
• The lienholder or secured lender (if the vehicle is financed) may hold an interest in some proceeds until the loan is satisfied.
• The lessor (finance company) when the vehicle is leased. Lease contracts often give the lessor certain rights to claims related to the vehicle.

If you do not appear on the title or lease as the owner or holder of an interest, you usually do not have a direct diminished value claim against an at-fault driver’s insurer. However, you can still take steps described below.

Common situations and how the process works

• You were driving someone else’s car (friend, family member): The vehicle owner is the person with the direct claim against the at-fault party’s insurer. Ask the owner to file the diminished value claim. The owner can also sign a written assignment that transfers the claim to you so you may pursue it.
• The car is financed: The lender is a secured party on the title. The owner (yourself or someone else) may still have a diminished value claim, but the lender could have an interest in settlement proceeds depending on the loan agreement. Notify the lender and coordinate any claim so you don’t violate loan terms.
• The car is leased: The lessor (leasing company) usually retains title. Lease contracts often require you to report damage and get approval for repairs. The lessor may pursue diminished value or require you to pay for diminished value at lease-end. Review the lease and contact the lessor early.
• Assignment of rights: If the owner does not want to pursue the claim, they can sign a written assignment transferring the right to sue or demand payment to you. The assignment should be signed, dated, and specific about the rights transferred.

How to pursue a diminished value claim when you are not the owner

1. Confirm who holds title or lease. Look at the title, registration, or lease paperwork.
2. Talk to the vehicle owner and explain your interest. Ask the owner to file with the at-fault insurer or to sign a written assignment of the claim to you.
3. Gather evidence: pre-accident photos, repair invoices, repair quality documentation, vehicle history report (e.g., CARFAX), market listings for comparable cars, and any appraisal of diminished value.
4. Present a written demand to the at-fault party’s insurer (as the owner or assignee). Include documentation and a clear dollar amount or method used to calculate diminished value.
5. If the insurer denies or undervalues the claim, escalate through the insurer’s internal appeal process. You can also file a consumer complaint with the New Mexico Office of Superintendent of Insurance (OSI).
6. If negotiations fail, consider small claims court or civil court. If you are not the owner, you must have standing—either you were assigned the claim in writing, or you bring the suit in the owner’s name (with their cooperation).

What to expect from insurers

Insurers handle diminished value claims in different ways. Some insurers will consider third-party diminished value claims (owner vs. at-fault driver). Others will not pay diminished value under a first-party claim (owner’s own insurer) depending on policy language. Expect the insurer to request documentation and often to dispute the amount.

New Mexico resources and consumer protections

New Mexico consumers can review insurance rules and file complaints with the Office of Superintendent of Insurance: New Mexico OSI. For New Mexico statutes and to check statutory timelines or other legal provisions, see the New Mexico Legislature: New Mexico Legislature. For information about local courts and small claims, visit the state courts website: New Mexico Courts.

When to get legal help

Get an attorney if the diminished value amount is large, the insurer denies your claim, or if title/lease issues complicate who has the right to recover. If you plan to sue and you are not the titled owner, an attorney can prepare a proper assignment agreement or bring the claim in the owner’s name.

Important: This page provides general information. It is not legal advice, and I am not a lawyer. For advice specific to your situation, consult a licensed attorney.