What You Need to Know About Diminished Value and Leased Vehicles If you follow our blog you know that we've previously discussed the concept of diminished value. Diminished value refers to the loss in market value that a vehicle incurs after it has been in an accident and is repaired. Even when the vehicle is repaired to the highest standard and looks “good as new” the vehicle inherently loses value. This is because vehicles that have an accident history carry a stigma. All other things being equal, a consumer will never pay the same price for a vehicle that has been involved in a collision compared to one with no prior accident history. Florida law is clear on the fact that the owner of a vehicle is entitled to bring a claim to recover the diminished value of their vehicle from the insurer of the at fault driver. For those who are leasing their vehicle, bringing a diminished value claim is a more complicated issue. Many insurers argue that the individual leasing a vehicle, the lessee, does not have the ability to assert a diminished value claim. They suggest that only the true owner of the vehicle, the lessor, has the standing to bring a claim. In Florida, standing has been defined as “a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy.” Sierra Club v. Morton,405 U.S. 727 (1927). “Standing is most easily shown if the controversy involves a potential economic harm to the plaintiff … and the plaintiff can establish standing to sue by showing that he or she has been adversely affected by the acts or omissions of the defendant…” Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178 (Fla. 3rd DCA 1985). So, the question then becomes is it the lessee or the lessor who is actually harmed by the diminished value of the vehicle after an accident? First, it is important to recognize that a damaged vehicle suffers diminished value regardless of whether it is owned outright or leased. When a lessee returns a leased vehicle at the end of the term that has been damaged but repaired adequately, there can still be thousands of dollars in diminished value. If we assume that the damage was the fault of a third party, then neither the lessee nor the lessor should be responsible for this lost value. The lessee is hurt by this diminished value because subsequent to the accident and repair they are still contractually obligated to pay the same monthly lease payment they originally agreed to even though the car is actually worth less. Furthermore, when the lessee returns a previously damaged vehicle at lease end, the lessor may hold them liable for the amount of the diminished value. Both of these scenarios demonstrate that the lessee may be adversely affected in an economic sense by the acts of the defendant and accordingly has a strong argument for standing. An additional consideration is that of lessees who intend to purchase the vehicle at the expiration of the lease term. A logical argument is that this provides the clearest demonstration of the lessee being harmed by diminished value since the price to purchase the vehicle is predetermined and won't take into account the diminished value resulting from an accident. As sound as that argument is, that damage is too speculative because there is no guarantee the lessee will in fact purchase the vehicle. The bottom line is that if a third party damages your leased vehicle, it is important that you contact the lessor and discuss the issue of diminished value. The at fault driver in the accident, not the lessee or lessor is responsible for the diminished value. Dealing with diminished value of a leased vehicle can be a complicated issue. If you have questions or would like additional information contact an attorney at the Dolman Law Group Accident Injury Lawyers, PA. 727-451-6900.