How does the diminished value process work if I do not own my car? (MS)

Disclaimer

This article is educational only and is not legal advice. Laws vary by fact and change over time. If you need legal advice about a specific case, consult a licensed Mississippi attorney.

Detailed answer

What is “diminished value”?

Diminished value is the reduction in a vehicle’s market value after it has been damaged in a collision and repaired. Even when repairs restore the car’s function and appearance, buyers commonly pay less for a vehicle with an accident history. Diminished value is normally measured as the difference between the car’s fair market value before the crash and its fair market value after repairs.

Who normally has the right to claim diminished value?

Legal claims for diminished value are usually owned by the party who has the economic interest in the vehicle — most often the titled owner (the name on the title). That owner may be the private owner, a bank or other secured creditor, or a leasing company. Mississippi law treats rights and payments consistent with ownership and insurable interest principles. If you do not own the car, your ability to recover depends on whether you have a recognized legal or contractual interest in the vehicle.

Common non-owner situations and how they affect diminished-value claims

1) You are the lessee (you lease the car)

Leasing companies usually hold title. The lessor (leasing company) generally has the legal right to claim diminished value because it owns the vehicle. A lessee’s right to recover diminished value depends on the lease agreement. Some leases let the lessee pursue claims for damage to protect their lease obligations (for example, to avoid being charged excessive wear-and-tear or a high buyout). If the lease does not permit it, the leasing company may control the claim and any payout.

2) You are the borrower/registered keeper but there is a lienholder

If you financed the car, the lender (lienholder) typically appears on the title. The lender’s interest is in securing payment on the loan. Insurers commonly pay the title owner (which can include the lienholder) for property damage or a total loss. You, as the borrower, may still be able to recover diminished value from the at-fault party (or that party’s insurer) if you can show you had an insurable interest (equity) and either the lender agrees to an assignment of the claim or insurer/owner pays you directly. In practice, lenders often require payoff first and can object to direct payments without lien satisfaction.

3) You are a family member or friend who regularly drives the vehicle (but is not on the title)

If you are not on the title, you generally lack standing to assert a diminished-value claim in your own name. You may still press a claim indirectly by asking the titled owner to pursue recovery and assign any proceeds to you, or by requesting the at-fault party’s insurer to compensate you for your out-of-pocket losses (rental, lost wages, repair-related costs), but recovering diminished value itself typically requires ownership/insurable interest or an assignment from the owner.

How the process usually works in Mississippi when you are not the owner

1. Notify the at-fault party’s insurer and report the facts. Provide the owner’s contact info and the titleholder’s name if possible.
2. Document the facts: photos of damage, repair invoices, records of prior condition, and market valuations (Kelley Blue Book, NADA, local dealer comparisons).
3. If the titled owner is willing, ask the owner to pursue a diminished value claim and either pay you for your loss or sign an assignment that transfers the claim to you so you can pursue it yourself.
4. Obtain a post-repair diminished-value appraisal from an independent appraiser experienced with diminished-value claims in Mississippi. Insurers often rely on such appraisals.
5. Negotiate with the at-fault insurer. If they refuse, the titled owner (or assignee) may file suit in Mississippi civil court to recover diminished value.

What insurers and owners often do

Insurers will typically pay the person with the legal right to the money. That tends to be the titleholder. If the titleholder is a bank or leasing company, the insurer may pay that party first and reduce any payout to the borrower or lessee. If the car is totaled, payments usually go to satisfy the loan or lease balance; the lessee/borrower may then receive any surplus. If repairs are made, some insurers deny diminished-value claims or offer a small settlement unless presented strong appraisals.

Practical consequences and risks

• If the owner refuses to cooperate, you will likely have a harder time recovering diminished value.
• Even if you obtain an assignment, the owner’s lender may need to be paid first if that lender has a security interest in the car.
• Small losses may not be worth litigation costs. Consider whether the likely recovery exceeds legal fees and expenses.

Mississippi-specific considerations and resources

Mississippi does not create a special, separate diminished-value statute for every situation; diminished-value claims arise from general property-damage and contract principles and depend heavily on who holds the title and the insurance contract language. For questions about insurance regulation or complaint procedures, the Mississippi Department of Insurance provides consumer guidance: Mississippi Department of Insurance. For general Mississippi statutory text and to research ownership, lien, or motor-vehicle statutes, consult the Mississippi Legislature website: Mississippi Code and Legislature.

When to consult an attorney

Talk to a Mississippi attorney if:

• The titleholder (lender or lessor) refuses to cooperate;
• The insurer denies liability but you have strong evidence of diminished value;
• The potential recovery is large enough to justify legal costs; or
• Complex lien, lease, or contract terms affect who gets paid.

Helpful hints

• Keep clear records: photos before and after repair, repair estimates, receipts, rental car invoices, and communication with insurers and the titled owner.
• Get at least one independent diminished-value appraisal after repairs. Insurers often accept appraisals from reputable auto appraisers.
• Review the lease or finance agreement to see whether it allows you to pursue claims or requires owner consent for settlements.
• If the title shows a lienholder, contact that lender early to learn its procedures for accident recoveries and payoffs.
• Ask the titled owner to provide a written assignment of any diminished-value claim if they agree to let you pursue it. Keep the assignment and notarize it if possible.
• Before filing suit, compare expected recovery with legal costs. For smaller disputes, small-claims court (if the claim fits the limit) can be an option—but verify Mississippi’s small-claims procedures first.
• If the insurer points to policy language to deny a claim, request a written explanation and the specific policy provisions.