Detailed Answer: How diminished value claims work when you don’t own the vehicle (Hawaii-focused)
This section explains, in plain language, how diminished value works in Hawaii when the person asking about the claim is not the vehicle’s legal owner. It uses common hypotheticals so a reader with no legal background can understand what to expect and what steps to take.
What is diminished value?
Diminished value is the loss in a vehicle’s market value after it is damaged and repaired. Even if repairs restore the car to safe operation and a good appearance, many buyers pay less for a vehicle with an accident history. That difference is the diminished value.
Who normally has the legal right to claim diminished value?
The legal owner of the vehicle — the person or entity listed on the vehicle title — generally has the primary right to claim diminished value. The owner suffers the economic loss in market value and so is the typical claimant against an at-fault driver’s insurer.
Common situations where you do not own the car
- You are a lessee (you lease the vehicle). The leasing company typically remains the titled owner. The lease may also have provisions that assign responsibility for damage and diminished value to you, the lessee.
- The vehicle is financed and a lender holds a lien. The purchaser is usually the registered owner, but a lienholder has a secured interest. Lienholders commonly expect repairs to protect their collateral.
- You are an authorized driver of someone else’s car (family, friend, employer). The titled owner is the claimant, unless the owner assigns the claim or there is another contractual arrangement.
- The vehicle is a rental, fleet, or company car. The rental company or employer generally owns the vehicle and handles claims; your responsibilities depend on rental or employment agreements and the insurance purchased.
Key legal and practical points under Hawaii law
Hawaii does not treat diminished-value claims differently purely because they cross ownership lines. The party with a property interest in the vehicle must show an economic loss. Practically, that means:
- If you are not the titled owner, the owner must normally file the diminished value claim with the at-fault party’s insurer.
- A titled owner can assign a diminished value claim to another person or to an attorney. An assignment lets a non-owner pursue the claim in the owner’s place. Get any assignment in writing.
- Leases and finance agreements often specify who is responsible for diminished value. Read those agreements closely — the contract can affect who can demand payment and from whom.
- Hawaii’s insurance and consumer protection authorities can help if an insurer refuses to handle a valid claim. For general insurance guidance in Hawaii, see the Department of Commerce and Consumer Affairs, Insurance Division: https://cca.hawaii.gov/ins/. For statute searches and the Hawaii Revised Statutes, see: https://www.capitol.hawaii.gov/.
How the diminished value process typically works when you don’t own the car
- Identify the vehicle’s legal owner and insurance coverages. If you were driving someone else’s car, find the title or ask the owner who the registered owner and primary insurer are. If the vehicle is leased or rented, notify the lessor or rental company.
- Determine who will file the claim. In most cases, the titled owner must file the diminished value demand against the at-fault driver’s insurer. If you want to pursue payment directly, ask the owner to assign the diminished value claim to you in writing.
- Get a diminished value appraisal or calculation. Use a qualified appraiser with experience in post-repair market value calculations. The appraisal should explain how the diminished value number was reached and include market references (comparable sales) and repair records.
- Send a demand package to the at-fault insurer. The package normally includes the appraisal, repair invoices, photos, the vehicle title or evidence of ownership, and a demand letter. If you are not the owner, include a written assignment or authorization from the owner that allows you to act on their behalf.
- Negotiate or escalate. The insurer may accept, reject, or make a counteroffer. If the insurer denies the claim and the owner still wants to pursue recovery, options include mediation, filing a lawsuit, or pursuing a claim through small claims court if the amount fits the court’s limits.
Practical examples (hypothetical)
Example A — Leased car: Jane leases a vehicle and is rear-ended by a negligent driver. The leasing company owns the title. The leasing contract states Jane is responsible for damage and any decrease in value. The lessor can pursue diminished value from the at-fault driver’s insurer. The lessor might assign its claim to Jane so she can handle negotiations directly.
Example B — Borrowed car owned by a friend: Alex borrows a friend Sam’s car and another driver is at fault. Sam is the titled owner. Sam must file the diminished value claim unless Sam signs a written assignment allowing Alex to claim the loss. Without an assignment, an insurer will deal with Sam.
Documentation you should gather
- Title or proof of ownership, or lease/rental agreement.
- Police report and photographs of damage.
- Repair invoices and estimates.
- A diminished value appraisal or market comparison report.
- A written assignment or signed authorization from the titled owner (if you are not the owner).
- Copies of insurance policies involved (your policy, owner’s policy, at-fault driver’s policy).
If an insurer says diminished value is not covered
Insurance companies sometimes deny diminished value claims or argue that repairs returned the vehicle to its pre-loss value. In that event:
- Ask the insurer for a written explanation of the denial.
- Provide a neutral appraisal or market analyses showing the loss in value.
- If the titled owner cannot get a fair result, consider filing a complaint with Hawaii’s Insurance Division: https://cca.hawaii.gov/ins/.
- For unresolved disputes, the owner (or an assignee) may pursue mediation, arbitration (if provided in a policy or contract), or litigation.
Timeline and costs
There is no fixed timeline. Appraisals and insurer responses can take weeks. If litigation becomes necessary, the process takes longer and costs rise. For modest claims, the owner or assignee may consider small claims court; for larger claims, weigh the cost of an attorney against likely recovery.
When to consult an attorney
Consider legal help if the diminished value is significant, the insurer refuses to negotiate in good faith, a lease or financing agreement complicates recovery, or you must draft or rely on an assignment of claim. An attorney can review contracts, prepare demand letters, and pursue litigation if needed.
Helpful Hints
- Confirm who is the titled owner before you do anything. Ownership determines who can file the claim.
- If you do not own the car, ask the owner for a written assignment or written permission to pursue a claim on their behalf.
- Read lease and finance contracts carefully for clauses about accident responsibility and diminished value.
- Get a documented diminished value appraisal. A clear, market-based report strengthens your claim.
- Keep all repair bills, photos, and correspondence with insurers organized and dated.
- Don’t accept the first low offer without documentation. Insurers often negotiate.
- If you are dealing with a rental or fleet company, contact their claims department promptly and follow the rental agreement’s procedures.
- If you need state help or have a complaint about an insurer’s handling of the claim, contact Hawaii’s Insurance Division: https://cca.hawaii.gov/ins/.
- For general statute searches and more information about Hawaii law, use the Hawaii State Legislature site: https://www.capitol.hawaii.gov/.
Disclaimer: This article explains general principles and common practices under Hawaii law. It is for informational purposes only and is not legal advice. Laws change and specific outcomes depend on the facts and contracts involved. Consult a qualified attorney in Hawaii for advice about your situation.