We receive a lot of inquiries from vehicle owners asking if it is possible to assert a diminished value claim on a leased vehicle. Unfortunately, the short answer is generally no. Of course, there is a huge caveat on that, as with almost all questions involving law: it depends. If you have questions about this or need help with filing an injury claim, our Arlington, VA truck accident lawyer is available to talk.
As a general rule, a diminished value claim can only be asserted by the owner of a vehicle. If you are leasing a vehicle, then you are a person with rights to utilize that vehicle in any manner you see fit. However, your usage is still governed by the terms of the lease. As long as you are using it, you may have rights to it, but you do not own that vehicle.
If you attempt to assert a diminished value claim on a leased vehicle, most car insurance companies, as a matter of course, will ask to see the registration or title documents. They will immediately recognize that the vehicle is leased and will immediately deny your claim. To be objective, they are not denying that the vehicle did indeed lose value after a car accident—they are simply stating that they do not have the right to negotiate or even discuss that claim with you because you are not the vehicle owner.
Alternately, we have also seen insurance companies that play a little fast and loose with the rules. They may honor a diminished value claim and then issue payments directly to the vehicle owner! You see none of it, despite having had to do all the work and talking with an insurance company. This is never a good idea, as the vehicle owner (the leasing company) may come back after you and say that you improperly spoke about the claim or settled a claim that you did not have a right to do.
After a car accident, any potential diminished value claim is owned by the “leasor,” or person leasing the vehicle to a third party (you, the person who has signed for the vehicle and is using it, are known as the “leasee”).
As you can see, when you are leasing a vehicle, this process can be fraught with problems. It is perfectly understandable for you to have leased a vehicle and then argue that you have been financially harmed because you still have to continue to pay for a newer vehicle that now has less value than it did when you signed the lease. This is an understandable thought process, but that’s simply not how it works. All vehicles lose value over time, and they lose significant value after car accidents. Regardless of your operation of the vehicle, the person who is truly harmed by the loss of that value is the owner.
There is another consideration that you have to keep at the forefront of your mind after a car accident involving a leased vehicle. You have to make sure that you have notified the leasing company of any damage to that vehicle—obviously, this includes car accidents! It is not unheard of for leasing companies to turn around and assert claims against the people who have leased their cars when they notice dings, dents, and scratches that they argue are beyond normal wear and tear. If you have been in any sort of car accident in a leased vehicle, we recommend that you notify the leasing company immediately!
When A Leasing Company May Assert A Diminished Value Claim Against You
As always, it depends. If you were at fault for the accident, or the accident happened due to your own negligence, yes, the leasing company may assert a diminished value claim against you and your insurance company.
However, if you were not negligent, then the leasing company certainly has a right to assert a diminished value claim; however, that claim would be against the at-fault driver. They have plenty of time to do this, as diminished value claims in Virginia are recognized to be property damage claims and are governed by a five-year statute of limitations (See: Virginia Code 8.01-243 [[ https://law.lis.virginia.gov/vacode/title8.01/chapter4/section8.01-243/]]).
Buying Your Car At The End Of A Lease
This misconception brings up another concern that some people may overlook when at the end of their lease. If you decide that you want to buy your car at the end of the lease term, that may be your right. However, be aware that the leasing company may have asserted a diminished value claim after a previous car accident. As such, you do not want to buy a car at their price when the actual value of the vehicle may be much lower. A leasing company would make money in this instance; you, on the other hand, would be out of a potentially substantial amount of money.
Always pay to obtain a full Carfax and claims history of the vehicle before you purchase it. As we’ve discussed, there may have been claims asserted that you don’t have any knowledge of! Since the leasing company is the owner, they can make the claim without your involvement!
Key Takeaway For Leased Vehicle Owners
If you are interested in filing a diminished value claim, you have to confirm that you are the owner of the vehicle and that you have the right to do so. For people who are in leases for vehicles, generally, it’s simply not your claim to make.
Always report accidents, no matter how minor, to the leasing company. If you try to turn in a lease and have not reported the accident to them, they may end up asserting their own claim against you!
Blaszkow Legal, PLLC is located in Alexandria, and we have been serving injured clients since 1981. Founding attorney Joseph A. Blaszkow is a member of the National Trial Lawyers “Top 100” list. If you need help with an accident claim or have related questions, call us today.
