Disclaimer: This article provides general information about Washington law and the diminished value process. It is not legal advice. Consult a licensed Washington attorney for advice about your specific situation.
Detailed Answer
What is “diminished value”?
Diminished value is the loss in a vehicle’s market value that remains after repairs are complete. Even if a car is repaired to a high standard, a history of collision damage can reduce resale value. Diminished value is a monetary loss distinct from repair costs.
Who can claim diminished value in Washington?
Under Washington practice, the party with the property interest in the vehicle (usually the titled owner) is the person who has the primary legal right to claim diminished value. That typically means:
- The titled owner can make a third-party claim against the at-fault driver’s insurer for diminished value.
- If you are the named insured or owner on a policy, you may pursue a first-party diminished-value claim with your own insurer in certain circumstances.
If you do not own the car, your ability to bring a diminished value claim depends on your relationship to the titled owner (lessee, lessee under a lease, lienholder, employee driving a company vehicle, person who paid repairs, etc.).
Common non-owner scenarios and how the claim usually works
- Leased vehicle: The leasing company owns the vehicle and holds title. The leasing company generally has the right to claim diminished value. As the lessee, you should review your lease contract: many leases require you to keep the vehicle in good condition, and you may be financially responsible for diminished value when returning the vehicle. Ask the lessor to pursue the claim. The lessor may assign its claim to you in writing.
- Financed vehicle (lender has a lien): The owner on the title still has the right to claim diminished value. The lender typically has a lien but not sole ownership. If you are the titled owner (even with a lien), you can pursue the diminished value claim. If the lender is the titled owner (rare), the lender controls the claim.
- Employer-owned or company vehicle: The employer (owner) usually must pursue the claim. If you are the driver, inform your employer and provide evidence; the employer can decide whether to assign claim rights to you.
- Borrowed car (friend/family): The titled owner has the claim. If you paid for repairs or suffered financial loss (for example, you paid to fix the car you borrowed), you may be able to get reimbursed by the owner or, with an assignment, pursue recovery yourself.
- Rental car: The rental company owns the vehicle and usually handles claims. If you are charged by the rental company for loss of value, coordinate with their insurer or request they pursue the at-fault driver’s insurer. Your rental agreement and your insurer’s policy will affect responsibilities.
Practical steps if you don’t own the car
- Identify the titled owner: check the vehicle title, registration, or ask the person who provided the vehicle.
- Notify the owner (if you aren’t the owner) and ask them to make a diminished value claim with the at-fault party’s insurer. The owner can also assign the right to pursue the claim to you in writing.
- Collect and preserve evidence: before-and-after photos, repair invoices, a vehicle history report, independent appraisals, and comparable market listings (comps).
- If the owner agrees, obtain a written assignment of any claim rights from the owner to you. A signed assignment document lets you step into the owner’s shoes and pursue the claim directly.
- If you paid for repairs or suffered out-of-pocket losses (rental car costs, loss of use), document these expenses; you may have a separate reimbursement claim even if the owner retains the diminished value claim.
- If the insurer denies the claim, consider negotiation, appraisal, small claims court, or civil suit. Washington’s statutes and court rules govern these options and timing.
How insurers treat diminished value claims
Insurers commonly distinguish between repair costs and diminished value. A third-party insurer (the at-fault driver’s carrier) may be liable for both repair costs and proven diminished value. Your own insurer may handle a claim through collision coverage and subrogate against the at-fault insurer.
Washington’s insurance statutes and regulations require insurers to handle claims in good faith. See Washington’s insurance code for insurer duties: https://app.leg.wa.gov/RCW/default.aspx?cite=48 and the chapter addressing claims practices: https://app.leg.wa.gov/RCW/default.aspx?cite=48.30.
Timing — act promptly
Washington law limits how long you have to bring a lawsuit for property damage. Generally, the statute of limitations for damage to property is three years. See RCW 4.16.080: https://app.leg.wa.gov/RCW/default.aspx?cite=4.16.080. To preserve rights, start the claims process quickly and keep good records.
When you might be able to act without the owner
If the owner assigns their claim to you in writing, you can pursue diminished value directly. Also, if you paid for repairs or other out-of-pocket costs, you may have a separate claim for reimbursement even if you are not the titled owner. Obtaining a written assignment or release is the cleanest way to secure authority to pursue the claim.
Helpful Hints
- Confirm ownership: always verify who holds title before assuming you can file a diminished value claim.
- Get everything in writing: if the owner agrees to let you pursue the claim or to reimburse you, get a signed assignment or written agreement.
- Document value before repair: if possible, record the vehicle’s condition and market value before repairs begin. If repairs already occurred, gather comparable sales and pre-accident listings.
- Collect strong evidence: photos, repair invoices, repair shop estimates, independent appraisals, and a vehicle history report strengthen a diminished value demand.
- Consider an independent appraisal: a certified appraiser can prepare a diminished value report used in negotiations or court.
- Check your lease or loan contract: many lease agreements address damage and diminished value obligations; reading the contract helps you understand who pays.
- Ask the insurer for their diminished value methodology: insurers may use formulae; ask for how they calculated any offer so you can challenge it with comps and appraisals.
- Use Washington court resources: Washington Courts provide self-help materials and small claims guidance at https://www.courts.wa.gov/selfhelp/.
- Consider alternatives to litigation: demand letters, appraisal clauses (if available), mediation, or small claims court can be quicker and less expensive than a full lawsuit.
- If in doubt, talk to a Washington attorney: an attorney can review ownership, contracts (leases), and evidence, and explain whether an assignment or suit makes sense in your situation.
Note: This article summarizes general legal concepts under Washington law and common practices for diminished value claims. It does not replace advice from a licensed attorney familiar with the full facts of your case.