Even with quality repairs, most vehicles suffer a loss in value after an accident or body repair. The loss in value is called inherent DIMINUTION IN VALUE (DIV). Vehicle Valuation Services, Inc. has provided assessments on these losses since 1995, and has become the largest purveyor in North America.
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An insurer may not be required to compensate the insured for the difference in the vehicle’s value before the collision and the vehicle’s value after the damage caused by the collision have been repaired. Pritchett v. State Farm Mut. Auto. Ins. Co., 834 So.2d 785 (Ala. App. 2002). Where a policy of insurance provides that the insurer’s liability for loss or damage to the property insured shall not exceed “what it would cost to repair or replace the auto or parts thereof with others of like kind and quality” the insured is entitled to recover only the cost of such repairs or replacements. Home Ins. Co. of New York v. Tumlin, 2 So.2d 435, 437 (Ala. 1941).
No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
Courts use diminution in value in establishing the amount owed in a condemnation proceeding, but currently no Alaska cases are available that deal with a claim for the loss of value of an auto repair by an insurer. Jackovich Revocable Trust v. State, Dep’t of Transp., 54 P.3d 294 (Alaska 2002).
No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
Arizona does not allow for first-party recovery, as the courts have determined that an insured’s measure of damages is not the difference in the market value of the auto immediately before and after the collision. Johnson v. State Farm Mut. Auto. Ins. Co., 754 P.2d 330 (Ariz. App. 1988).
Courts agree with jurisdictions that have “generally held that the measure of compensation to the owner of a negligently damaged motor vehicle may include the cost of repair and proven residual diminution in fair market value.” Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 138 Ariz. 562, 564, 675 P.2d 1381, 1383 (Ariz. Ct. App. 1983).
Courts have stated that Arkansas has maintained that the “measure of damages to personal property is the difference in the fair market value of the property immediately before and immediately after the occurrence,” and that “the reasonable cost of repairs may be considered in determining this difference.” Daughhetee v. Shipley, 669 S.W.2d 886 (Ark. 1984).
The measure of damages is the difference between the value of the vehicle immediately before and after the accident. However, when proving damages for a vehicle not a total loss, the difference in fair market value may be established by the reasonable cost of repairing the damaged property. Crooms v. Capps, 274 S.W.3d 364 (Ark. App. 2008). If repairs do not substantially restore vehicle to its former condition and value, the proper measure of damages is the difference in value before the accident and after the accident and repairs. MFA Ins. Co. v. Citizens Nat. Bank of Hope, 545 S.W.2d 70 (Ark. 1977).
Courts have held that, where a damaged auto was repaired to “its pre- accident safe, mechanical, and cosmetic condition,” an insurer’s obligation to repair to “like kind and quality” was discharged according to the insurance policy. However, recovery for tort damages is limited to the difference between the fair market value of the object before the loss and its value after the loss. Ray v. Farmers Ins. Exch., 200 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988); Moran v. California Dep’t of Motor Vehicles, 139 Cal. App.4th 688 (Cal. App. Dist. 4, 2006). A court will not rewrite an otherwise unambiguous limitation of collision coverage to provide for a risk not bargained for.
No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
“When an automobile insurer promises to provide an insured with a vehicle ‘of like kind and quality,’ the insurer must provide the insured, through repair, replacement, and/or compensation, the means of acquiring a vehicle substantially similar in function and value to that which the insured had prior to his or her accident.” Hyden v. Farmers Ins. Exch., 20 P.3d 1222 (Colo. App. 2000).
Courts have held that “the measure of damage is the difference between its value immediately before its damage and immediately thereafter, together with any expense of reasonable efforts to preserve or restore it.” Trujillo v. Wilson, 117 Colo. 430, 434, 189 P.2d 147, 150 (Colo. 1948); Larson v. Long, 219 P. 1066 (Colo. 1923) (permitting “admission of evidence of the [diminution] in value of defendant's car on account of its having been in the accident” because such “[diminution] is an element of damage”).
The court has discretion to select the repair measure which stands in as a substitution for diminution in value caused by damage to property. There is currently no cases available dealing with insurance recovery as differentiated from tort recovery. Willow Springs Condominium Ass’n, Inc. v. Seventh BRT Dev. Corp., 245 Conn. 1 (Conn. 1998).
Plaintiff is entitled to recover the reasonable repair costs and any residual diminution in value. Littlejohn v. Elionsky, 36 A.2d 52 (Conn. 1944); Stults v. Palmer, 141 Conn. 709 (1954); Damico v. Dalton, 1 Conn. App. 186 (1984); Papenheim v. Lovell, 530 N.W.2d 52 668, 672 (Iowa 1995); Alexander v. Bailey, 55 Conn. L. Rptr. 653 (2013); Chenevert v. Turek, 2013 WL 6671512 (Conn. 2013); Corridino v. Kovaks, et al., 2013 WL 8118969 (Conn. 2013); Sheldon v. Soucy, 2014 WL 1814279 (Conn. 2014); Bartnick v. Stehr, 2014 WL 5094332 (Conn. 2014).
D.C. courts have allowed for a tort remedy, but they have not addressed the issue when it involves the coverage available under an insurance policy. Other jurisdictions were referenced when they determined that “recovery may be had for both the reasonable cost of repair and the residual diminution in value after repair, provided that the award does not exceed the gross diminution in value.” American Service Center Associates v. Helton, 867 A.2d 235 (D.C. 2005).
Delaware Superior Court briefly determined that the majority of jurisdictions requiring the insurer to pay for diminution in value is the better view. However the Delaware Supreme Court overruled that decision by holding that: “We conclude that the language ‘repair and replace’ is not ambiguous and that this language does not contemplate payment for diminution of value.” Delledonne v. State Farm Mutual Ins. Co., 621 A.2d 350, 352 (Del. Super. Ct. 1992); O’Brien v. Progressive Northern Ins. Co., 785 A.2d 281 (Del. 2001).
Courts have held that that an auto collision policy which provides that the insurer must repair or replace the damaged vehicle “with other of like kind and quality” does not require the insurer “to compensate the insured in money for any diminution in market value after the insurer completes a first- rate repair which returns the vehicle to its pre-accident level of performance, appearance, and function.” Siegle v. Progressive Consumers Ins. Co., 819 So.2d 732 (Fla. 2002).
Florida courts have held that “the cost of the repairs made plus the diminution in value will ordinarily be the proper measure of damages, with the burden on the plaintiff to prove in addition to the cost of repairs, that he suffered the additional damage of diminution of value by virtue of the vehicle having been involved in the accident.” McHale v. Farm Bureau Mut. Ins. Co., 409 So.2d 238, 239 (Fla. Dist. Ct. App. 1982).
The Georgia Supreme Court has determined that the public policy of Georgia requires insurers to pay the diminished value, as well as the cost of repair of an auto, even if the insured does not make a claim for the diminished value, if the terms of the policy are similar to those of State Farm’s. The court held State Farm had a duty to evaluate all first-party physical damage claims for the existence of diminution in value. In an action by the owner of personal property, such as an automobile, to recover for loss or damage sustained by him as a result of a tortious injury thereto, the measure of damages is to be determined under general principles of law. But, in a suit on a contract, as a policy of insurance, whereby the owner is insured against actual loss or damage to an automobile by collision, the measure of the insurer’s liability will be determined according to the terms of the contract. State Farm Mut. Auto. Ins. Co. v. Mabry, 556 S.E.2d 114 (Ga. 2001).
Georgia courts have found that in a third-party action “[t]he measure of damages in an action to recover for injuries to a motor vehicle… is the difference between the value of the vehicle before and after the collision or other negligence” or in a case where the owner repairs the vehicle, damage can be shown by “the reasonable value of labor and material used for the repairs and the value of any depreciation (permanent impairment) after the vehicle was repaired, provided the aggregate of these amounts does not exceed the value of the vehicle before the injury.” Perma Ad Ideas of Am., Inc. v. Mayville, 158 Ga. App. 707 (1981).
Hawaii courts have used diminution in value to establish value for the purposes of condemnation, along with using diminution as the method of establishing values for loss to real property. County of Kauai v. Pacific Standard Life Ins. Co., 653 P.2d 766 (Haw. 1982); Clog Holdings, N.V. v. Bailey, 992 P.2d 69 (Haw. 2000), Opinion Ordered Depublished (April 20, 2000).
Idaho courts have addressed diminution by speaking to the requirement, in a suit against a title company, to show some diminution in value of the real property. Boel v. Stewart Title Guaranty Co., 43 P.3d 768 (Idaho 2002).
Evidence of diminution in value will lead to coverage for property damage even though there was no physical injury. Traveler’s Ins. Co. v. Eljer Mfg., Inc.,
757 N.E.2d 481 (Ill. 2001).
Illinois courts have also held that “[t]o expand the ordinary meaning of ‘repair or replace... with other of like kind and quality’ to include an intangible, diminished-value element would be ignoring the policy’s language or giving the policy’s text a meaning never intended.” Sims v. Allstate Ins. Co., 851 N.E.2d 701 (Ill. App. 2006).
Illinois courts have stated that “[t]he measure of damages for a repairable injury to personal property, is ordinarily the cost of making the repair and the value of the use of the property while the owner is necessarily deprived of it by reason of the repair. If the property is worth less after it is repaired than its value before the injury, the measure of damages is the difference in the market value before the injury and in its repaired condition in addition to the reasonable cost of repairs.” Trailmobile Div. of Pullman, Inc. v. Higgs, 12 Ill. App. 3d 323 (1973).
Indiana Supreme Court has found that diminution in value may not be recovered by the insured of an auto policy, and noted that a policy may provide that the insurer may choose to pay either the actual cash value of the vehicle or the amount necessary to repair, not some combination of the two. Allgood v. Meridian Security Ins. Co., 836 N.E.2d 243 (Ind. 2005).
However, the same court also found that an uninsured motorist carrier must pay diminution in value since it stands in the shoes of the uninsured motorist and must pay tort damages. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005).
Indiana courts have adopted the measure of damages as in the Restatement (Second) of Torts, stating that “the fundamental measure of damages in a situation where an item of personal property is damaged, but not destroyed, is the reduction in fair market value caused by the negligence of the tortfeasor.” Wiese-GMC, Inc. v. Wells, 626 N.E.2d 595 (Ind. Ct. App. 1993).
Diminished value provisions rescinded by Insurance Adjustment Bureau 4/28/04, effective 4/7/04. Iowa Admin. Code R. § 191-15.43(507B).
Iowa courts have stated that, as it is not unusual to permit recovery for the “reasonable cost of repairing or restoring injured property… if the value of the repaired or restored property is less than the value of the property before the injury, such difference in value is also allowed, in addition to the reasonable cost of repair or restoratio[n].” Halferty v. Hawkeye Dodge, Inc., 158 N.W.2d 750 (Iowa 1968).
Kansas Supreme Court has determined that the proper measure of damages, where repair fails to restore the property to its former condition and value, is the value of the vehicle immediately before the damage less the value immediately after repairs are made, plus the reasonable cost of the repairs may be applied. Venable v. Import Volkswagen, Inc., 519 P.2d 667 (Kan. 1974).
Kansas courts have also held that the basic principle of contract damages is to make a party whole by putting it in as good a position as the party would have been had the contract been performed. Kansas Power & Light Co. v. Thatcher, 797 P.2d 162 (Kan. App. 1990).
In cases where the repair of an injury did not restore the property to its original condition and value, but was a reasonable effort to make it as nearly usable as practicable, and as repaired was not as valuable as it was before the injury, the cost of the repair together with the difference in value of the repaired property and its value before injury might in some cases be a fair measure of the loss sustained. Broadie v. Randall, 216 P. 1103 (Kan. 1923).
An insurer is required to restore the physical condition but not the value of the damaged automobile, which was previously followed by the Court of Appeals in Tomes v. Nationwide Ins. Co., 825 S.W.2d 284 (Ky. App. 1991) and General Accident Fire & Life Assurance Corp. v. Judd, 400 S.W.2d 685 (Ky. 1966).
The Louisiana Court of Appeals has held that “the insurer’s obligation is satisfied once payment is made for the full and adequate physical repair of a damaged vehicle…” Campbell v. Markel American Ins. Co., 822 So.2d 617 (La. App. 2001).
Another Court of Appeals case required proof of diminution: “diminution in value of a vehicle involved in an accident is an element of recoverable damages if sufficiently established… where the measure of damages is the cost of repair, additional damages for depreciation may be recovered for the diminution in value due to the vehicle’s involvement in an accident.” Defraites v. State Farm Mut. Auto. Ins. Co., 864 So.2d 254 (La. App. 2004).
As of 2010, L.S.A. § 2800.17 governs third-party liability for the diminution in the value of a damaged vehicle and provides: Whenever a motor vehicle is damaged through the negligence of a third-party without being destroyed, and if the owner can prove by a preponderance of the evidence that, if the vehicle were repaired to its pre-loss condition, its fair market value would be less than its value before it was damaged, the owner of the damaged vehicle shall be entitled to recover as additional damages an amount equal to the diminution in the value of the vehicle. Notwithstanding, the total damages recovered by the owner shall not exceed the fair market value of the vehicle prior to when it was damaged, and the amount paid for the diminution of value shall be considered in determining whether a vehicle is a total loss pursuant to R.S. 32:702. L.S.A. § 2800.17; See also, Orillac v. Solomon, 765 So.2d 1185 (La. 2000).
An insurer’s liability for a loss under the policy extends only to the loss that can be repaired as that term is commonly understood. Because diminution in value is a loss that cannot be repaired, an ordinary person would reasonably conclude that a claim for diminished value is not covered by the policy. Hall v. Acadia Ins. Co., 801 A.2d 993 (Me. 2002).
An owner or subrogated carrier may recover the difference in the value of auto before and after the accident. However, an auto insurance policy, which obligates the insurer to pay lesser of either actual cash value of vehicle at time of loss or amount necessary to repair or replace vehicle, does not mandate liability for diminution in vehicle’s value due to accident despite repair, given that policy’s use of term “repair” was unambiguous, and such diminution was not loss that could be repaired. Collins v. Kelley, 179 A. 65 (Me. 1935).
Diminution of value has been found to be appropriate as a measure of damages in a condemnation case. Reichs Ford Road Joint Venture v. State Roads Comm’n of the State Hwy. Admin., 880 A.2d 307 (Md. 2005).
Maryland courts have determined that “if [a] plaintiff can prove that after repairs his vehicle has a diminished market value from being injured, then he can recover in addition to the cost of repairs the diminution in market value, provided the two together do not exceed the diminution in value prior to the repairs.” Fred Frederick Motors, Inc. v. Krause, 12 Md. App. 62 (Md. 1971).
Courts have stated that they will use usual standards of contract interpretation, and have held that “[n]o ‘objectively reasonable insured, reading the relevant policy language’ would conclude that these terms include compensation for diminution in market value or for anything else beyond restoration of the vehicle’s pre-collision physical condition.” Given v. Commerce Ins. Co., 440 Mass. 207 (Mass. 2003).
Insurers’ obligation under auto policies to “repair or replace” did not require payment for diminution in value of vehicle as result of accident, where provisions expressly limited coverage to lesser of actual value or cost of repair. Driscoll v. State Farm Mut. Auto. Ins. Co., 227 F. Supp.2d 696 (E.D. Mich. 2002).
Policy required insurer to compensate insured for the loss of value (depreciation) not fully compensated for by repair. Ciresi v. Globe & Rutgers Fire Ins. Co., 244 N.W. 688 (Minn. 1932).
Mississippi courts have held that if, despite repairs, there remains a loss in actual market value, that deficiency is added to the cost of the repairs; and that the measure of loss to an auto damaged, but not destroyed by a collision, is the difference between its reasonable market value immediately prior to the collision and its reasonable market value after all reasonable and feasible repairs have been made. Potomac Ins. Co. v. Wilkinson, 57 So.2d 158 (Miss. 1952); Calvert Fire Ins. Co. v. Newman, 124 So.2d 686 (Miss. 1960).
Cost of repair of damaged vehicle may be recovered in third-party claim, as well as remaining diminution in pre-tort value after proposed repairs, but in no event may cost of repair be recovered to extent it exceeds total diminution in pre-tort value, in case of one holding personalty for sale rather than for personal use. Ishee v. Dukes Ford Co., 380 So.2d 760 (Miss. 1980).
No other court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
If policy language is unambiguous regarding no coverage for diminution, the diminished value is not a covered loss and the insurer’s liability was capped at either the actual cash value of the auto or the cost to repair or replace the damaged auto itself or with parts or property of like kind and quality. Lupo v. Shelter Mut. Ins. Co., 70 S.W.3d 16 (Mo. App. 2002).
However, the Missouri Court of Appeals has held that “If the insurer, permitted to undertake repairs, falls short of substantial restoration of function, appearance and value, the insured, upon proper showing, can recover damages in an amount equal to the difference between the reasonable market value of the insured automobile immediately prior to the upset and its reasonable market value when tendered to plaintiff after repairs.” Williams v. Farm Bureau Mut. Ins. Co. of Mo., 299 S.W.2d 587 (Mo. Ct. App. 1957).
Although proper measure of damages in an automobile collision case is generally the difference between the market value of automobile before collision and its value after collision, that is not the only measure of damages allowable; also allowable are the cost of repairs and the difference between the market value of the car before the collision and its value after the repairs. Rook v. John F. Oliver Trucking Co., 556 S.W.2d 200 (Mo. App. 1977); Hood v. M. F. A. Mutual Insurance Co., 379 S.W.2d 806 (Mo. App. 1964); Langdon v. Koch, 393 S.W.2d 66 (Mo. App. 1965). There may be other items of loss, such as cost of preservation and diminution of damage and loss of use, which would be added to the total damage suffered by the owner. and the amount, if any, of the deterioration of the repaired car, being the difference in the reasonable market value of the car immediately before the accident and the reasonable market value of the same after it had been repaired. Gilwee v. Pabst Brewing Co., 193 S.W. 886 (Mo. App. 1917). Also allowed is recovery for residual diminution in value but doubtful that an owner's testimony could constitute sufficient proof. Thomas v. Global Boat Builders & Repairmen, Inc., 482 So.2d 1112, 1115 (Miss. 1986).
Where the policy limits the insurance company’s liability to the actual cost of replacement of the property damaged or destroyed, “replacement” means the restoration of the property to its condition prior to the injury. Such restoration may or may not be accomplished by repair or replacement of broken or damaged parts. There is not a complete restoration of the property unless there has been no diminution in value after repair of the car. Courts have differed in their construction of similar limitation clauses and will probably continue to do so, so long as policies are couched in language tending toward uncertainty and confusion. Eby v. Foremost Ins. Co., 374 P.2d 857 (Mont. 1962).
Where damage to vehicle can, at a reasonable cost, be repaired and the property restored to substantially its condition immediately before damage occurred, and cost of repair does not exceed difference in market value of the property before and after injury, then measure of damages is reasonable cost of repair plus reasonable value of loss of use of the property for the reasonable amount of time required to complete repair. Loss of market value is only recoverable when vehicle is not repaired. Chlopek v. Schmall, 396 N.W.2d 103 (Neb. 1986).
Currently no applicable Nevada court decisions can be found regarding recovery allowed for diminution in value in a first-party claim. However, Nevada statutory law provides that when an insurer elects to repair a vehicle, the only requirement is that the insurer restores the damaged vehicle to its condition before the loss. No mention is made of payment for residual diminished value. Nev. Admin. Code § 686A.680.
Currently no applicable New Hampshire court decisions can be found regarding recovery allowed for diminution in value in a first-party claim.
Depends on policy language. Early case law says that actual cash value of an auto loss is established as fair market value, and have applied principles holding that when the cost to repair a vehicle is proven, but there exists additional proof showing that even with the repair, the vehicle has depreciated, the plaintiff is entitled to the reasonable cost of repair plus the depreciation, if any. Fanfarillo v. East End Motor Co., 411 A.2d 1167 (N.J. App.
Where policy unambiguously excludes coverage for diminution of value the insurer’s liability is capped at the cost of returning the damaged vehicle to substantially the same physical, operating, and mechanical condition as existed immediately before the loss. Insurer’s obligation does not include liability for any inherent diminished value caused by conditions or defects that are not subject to repair or replacement, such as a stigma on resale resulting from “market psychology” that a vehicle that has been damaged and repaired is worth less than a similar one that has never been damaged. Kieffer v. High Point Ins. Co., 25 A.3d 1206 (N.J. Super. App. 2011).
Measure of damages, when auto is damaged, is the difference between the reasonable market value of auto before and after the tortious injury and the cost of repair and the depreciated value of vehicle as a result of having been in an accident, is the appropriate measure of damages, so long as total does not exceed the diminution in market value and does not exceed the pre- accident market value of the vehicle. Fanfarillo v. E. End Motor Co., 411 A.2d 1167 (N.J. Super. 1980). In Fanfarillo, the value before the theft was $7,900 and after the theft $5,000, a difference of $2,900. There was also evidence that the vehicle as repaired was worth only $7,500, so that the jury could have found total damages to the vehicle of $2,313 ($1,913 for the cost of repair and $400 depreciated value).
The New Mexico Court of Appeals has followed the majority trend toward disallowing recovery for the diminished market value under the terms of plaintiff’s policy of insurance. Davis v. Farmers Ins. Co. of Ariz., 142 P.3d 17 (N.M. App. 2006).
New Mexico has held that “damage awards should provide full and just compensation for the injured party”, and that such compensation is tantamount to the concept of making the injured person whole. It has also been stated that the proper measure of damages for personal property damage will be whichever is less - repair costs plus depreciation or reduction in market value. Hubbard v. Albuquerque Truck Ctr. Ltd., 125 N.M. 153 (1998).
In Edwards v. Maryland Motor Car Ins. Co., 197 N.Y.S. 460 (N.Y. App. Div. 1922), the court held that diminution in value is damage embraced within the clause of the policy insuring the plaintiff against direct loss or damage by the peril of theft. The policy contained language that the insurance company had the option to “repair, rebuild, or replace the property lost or damaged with other of like kind and quality.” The court found that “diminution in value is damage embraced within the clause of the policy insuring plaintiff ‘against direct loss or damage’ by the perils of ‘theft, robbery or pilferage.’” The court went on to state that the liability is not severed by making the insurance company liable for actual cost of repairs or replacement. The court notes that this case allowed recovery for diminished value by finding coverage in another section of the insurance policy and not due to any obligation to repair the auto with like kind and quality.
In Miller v. Sanchez, 6 Misc.3d 479, 789 N.Y.S.2d 850 (N.Y. City Civ. Ct. 2004), the court accepted the difference in value as the proper measure of tort damages. If the auto is of the type that appreciates in value, such as with rare automobiles, or is otherwise unique or brand new, third-party diminution of value damages for a motor vehicle are recoverable in addition to the cost of repairs even if the repairs restore the vehicle to its pre-accident condition. Franklin Corp. v. Prahler, 932 N.Y.S.2d 610 (N.Y. App. 2011); Rosenfield v. Choberka, 529 N.Y.S.2d 455 (N.Y. 1988) (vehicle “a few weeks” old); Parkoff v. Stavsky, 2013 WL 4528799 (N.Y. App. 2013) (Mercedes-Benz with only 398 miles); Franklin Corp. v. Prahler, 932 N.Y.S.2d 610 (N.Y. App. 2011) (class car).
North Carolina courts have essentially found that the measure of damages is the fair market value of the car immediately before the collision and the fair market value after the accident: “where the insurer elects to repair the damaged automobile and represents, at least tacitly, that it will place the vehicle in the condition that it was in previously, the insured has no choice but to acquiesce, and the original contract of the parties is converted into a new one, under which the insurer is bound to repair the automobile and restore it to its former condition.” Pierce v. American Fidelity Fire Ins. Co., 83 S.E.2d 493 (N.C. 1954).
North Carolina uses a variety of methods to determine diminished value, including the ClaimCoach.com system and the Classic Car Appraisal Service (Don Peterson) methodology, in addition the 17(c) formula mentioned in the introduction to this chart above. North Carolina has actually passed a statute which outlines the procedure for a policyholder to make a first-party diminished value claim. N.C. Gen. Stat. Ann. § 20-279.21(d)(1) provides that, if an insurer’s and policyholder’s estimate of diminished value differs by more than $2,000 or 25% of the vehicle’s fair market retail value, then each party selects an independent appraiser to appraise the loss. If they cannot agree on a number, then a third-party umpire is called to determine the diminished value, whose report is binding on the parties. Though time-consuming, this method avoids the criticism of the 17(c) formula and keeps the parties out of court.
The measure of damage for injury to personal property is the difference between the market value of the property immediately before the injury and the market value immediately after the injury. DeLaney v. Henderson-Gilmer Co., 135 S.E. 791 (N.C. 1926). Evidence of the reasonable value of repairs to a damaged vehicle, and the reasonable market value of the vehicle as repaired, are admissible to show the difference in its value before and after it was injured. U. S. Fid. & Guar. Co. v. P. & F. Motor Express, 18 S.E.2d 116 (1942).
No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a first-party claim.
The North Dakota Supreme Court has held: “The measure of damages for injury to property caused by the breach of an obligation not arising from contract is presumed to be the reasonable cost of repairs necessary to restore the property to the condition it was in immediately before the injury was inflicted and the reasonable value of the loss of use pending restoration of the property, unless restoration of the property within a reasonable period of time is impossible or impracticable, in which case the measure of damages is presumed to be the difference between the market value of the property immediately before and immediately after the injury and the reasonable value of the loss of use pending replacement of the property.” Sullivan v. Pulkrabek, 611 N.W.2d 162 (N.D. 2000).
Ohio case law has held in particular cases that the insured was not allowed to recover diminution in value of a damaged auto under the particular policy, and that that there was no cause of action for diminished value of an auto. Nationwide Mut. Ins. Co. v. Shah, 2004 Ohio 1291 (Ohio App. Dist. 5, 2004); Kent v. Cincinnati Ins. Co., No. CA2001-04-100 (Ohio App. Dist. 12, 2001).
When a plaintiff proves that the value of his auto after repair is less than the pre-injury value of the auto, the plaintiff or subrogated carrier may also recover the residual diminution in value in addition to the cost of repair, provided that the plaintiff may not recover damages in excess of the difference between the market value of the auto immediately before and after the injury. State Farm Mutual Auto. Ins. Co. v. Cheeks, 2014 WL 470874 (Ohio App. 2014); Rakich v. Anthem Blue Cross and Blue Shield, 875 N.E.2d 993 (Ohio App. 2007).
Oklahoma has held that “unless the collision resulted in a total loss of the automobile plaintiff’s measure of recovery was the difference between the fair market value of his automobile in the condition in which it was immediately prior to the collision, and its value thereafter. If the collision resulted in a total loss of the auto his measure of recovery was the fair market value thereof in the condition in which it was immediately before the collision.” Phoenix Ins. Co., Hartford, Conn. v. Diffie, 270 P.2d 634 (Okla. 1954).
Oklahoma statute provides, “For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this chapter, is the amount which will compensate for all detriment proximately caused thereby, whether it could have been anticipated or not. ” Okla. Stat. Ann. tit. 23, § 61.
In cases where it is shown that repairs failed to bring damaged item of personal property up to the condition it was in prior to the damage, the cost of repairs made plus post-repair diminution in value of the property will ordinarily be the proper measure of damages. Brennen v. Aston, 84 P.3d 99 (Okla. 2003).
The Oregon Supreme Court has stated that the insured was entitled to the difference between the pre-loss and post-loss value of the vehicle and the proper repair of the auto may not accomplish this result, and that a complete restoration of the property has not occurred unless there has been no diminution in value after repair of the auto. Dunmire Motor Co. v. Oregon Mut. Fire Ins. Co., 114 P.2d 1005 (Or. 1941).
Court of Appeals of Oregon acknowledged potential acceptance of evidence of diminished value, but found that such evidence was not presented. EAM Advertising Agency v. Helies, 954 P.2d 812 (Or. App. 1998).
The Supreme Court specifically noted that, with regard to remedial damage to realty, a plaintiff may recover only the cost of repair or restoration without regard to the diminution in value of the property, and has also stated in a separate case that it was unaware of any circumstances where an insurance company reimbursed the insured for diminished value. The Court also held that such payment would not be the norm, and could not form the basis for a reasonable expectation by the public. Lobozzo v. Adam Eidemiller, Inc., 263 A.2d 432 (Pa. 1970); Munoz v. Allstate Ins. Co., No. 9906-2855 (Pa. Comm. Pl. 1999).
When the vehicle is not a total loss,, the plaintiff may recover (a) the difference between the market value of the vehicle before the harm and the value after the harm, or, at the plaintiff’s election, the reasonable cost of repair or restoration where feasible, with due allowance for any difference between the original value and the value after repairs, and (b) the loss of use. Holt v. Pariser, 54 A.2d 89, 91 (Pa. Super. 1947); Horton v. Philadelphia Rapid Transit Co., 94 Pa. Super. 553, 555-56 (Pa. 1928); Bauer v. Armour & Co., 84 Pa. Super. 174 (Pa. 1924).
A Rhode Island Superior Court denied an insurer’s summary judgment as to diminution in value in a case addressing policy language, finding that an ambiguity existed as to whether or not “the cost of repair or replace the property with other of like kind and quality” includes damages for the inherent diminished value of an auto resulting from the vehicle being in an accident. The Court held where a dispute existed with respect to the parties’ intent, there existed a genuine issue of material fact that must be resolved by the jury. Cazabat v. Metropolitan Property & Casualty Ins. Co., 2000 WL 1910089 (R.I. Super. Ct. 2000).
Where the policy language clearly “expressly limits coverage to the lesser of the actual value or the cost of repair” the South Carolina Supreme Court has held that “[t]hese are alternatives, which do not include an additional obligation to pay for diminished value when the cost of repair is chosen.” The Court also would not read into the cost of repair an additional requirement to also pay for diminished value since, to do so, would render the limitation provision meaningless. Schulmeyer v. State Farm Fire & Cas. Co., 579 S.E.2d 132 (S.C. 2003).
South Carolina has held that “the cost of the repairs made… plus the (remaining) diminution in value of the property will ordinarily be the proper measure of damages.” Newman v. Brown/, 228 S.C. 472, 477, 90 S.E.2d 649, 652 (1955).
The South Dakota Supreme Court followed the majority rule and refused to allow recovery of diminished value after the full repair of a vehicle and applied the clear language of the insurance policy. Culhane v. Western Nat’l Mut. Ins. Co., 704 N.W.2d 287 (S.D. 2005).
The Tennessee Court of Appeals refused to apply diminution in value in Tennessee auto policies finding the wording unambiguous and limiting the insured to repairs. Black v. State Farm Mut. Auto. Ins. Co., 101 S.W.3d 427 (Tenn. App. 2002).
Texas courts have refused to allow recovery of diminution in value, and have stated that “[w]here an insurer has fully, completely, and adequately
‘repaired or replaced the property with other of like kind and quality’ any reduction in market value of the vehicle due to factors that are not subject to repair or replacement cannot be deemed a component part of the cost of repair or replacement.” American Manufacturers Mut. Ins. Co. v. Schaefer,
124 S.W.3d 154 (Tex. 2003).
The Texas Department of Insurance Bulletin B-0027-00 (2000) has also held: “The position of the Department is that an insurer is not obligated to pay a first party claimant for diminished value when an automobile is completely repaired to its pre-damage condition. The language of the insurance policy does not require payment for, or refer to, diminished value.”
A vehicle’s diminution in market value due to additional mileage and the marketplace perception that a fully repaired vehicle was inferior was not part of the insurer’s obligation to repair the vehicle after a theft under the policy. Because the vehicle was fully repaired, the insurer was not required to pay its inherent diminished value, i.e., the difference between the value before the loss and after repair. Where an insurer has fully, completely, and adequately repaired or replaced the property with other of like kind and quality, any reduction in market value of the vehicle due to factors that are not subject to “repair or replacement” cannot be deemed a component part of the cost of repair or replacement. Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454 (Tex. App. 2000).
No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a first-party claim.
In an action for damages to an auto, plaintiff, being entitled to recover the difference in the market value of his auto immediately before and after the injury, can recover not only the reasonable cost of repairs, but also any depreciation in market value after repairs were completed. Metcalf v. Mellen, 192 P. 676 (Utah 1920).
Absent specific policy language in a claim made by an insured to the contrary, a policy must pay for diminished value. When evaluating such diminished value claims, insurers must take into account all relevant information which would include, but not be limited to, all relevant information provided by an insured or third-party claimant regarding a claim for diminution in value. While the Department has not mandated a particular method for adjusting such claims, insurers must be able to articulate a fair and equitable process and standards for such an adjustment. VT Bulletin 164 (8-10-11).
The usual measure of damages in cases involving property damage to an auto is the difference between market value of auto immediately before accident and its market value immediately afterwards. In determining the difference between value of auto before and after accident, or its depreciation as result of injury, evidence is admissible as to the reasonable cost of repairs made necessary thereby, and as to the value of automobile as repaired. Kinney v. Cloutier, 211 A.2d 246 (Vt. 1965). Measure of damages for damage to a vehicle is fair market value before the injury less fair market value after the injury. Wells v. Vill. of Orleans, Inc., 315 A.2d 463 (Vt. 1974). No other court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
The Virginia Supreme Court has refused to compensate an insured for the loss of his new car warranty where the policy did not make such an agreement and the diminution in value was not recoverable under the policy. Bickel v. Nationwide Mut. Ins. Co., 143 S.E.2d 903 (Va. 1965).
Where an auto has been damaged but not totally destroyed and it is reasonably susceptible of repairs, the measure of damages is the cost of repairs and any diminution of the auto’s market value which results from the car having been injured after the repairs; that is, the cost of repairs plus any amount of depreciation in value of the vehicle as repaired. Averett v. Shircliff, 237 S.E.2d 92 (Va. 1977).
In Moeller v. Farmers Ins. Co. of Washington, 267 P.3d 998 (Wash. 2011), the court decided a case of first impression holding that an auto policy provided first-party coverage for diminished value following post-accident repairs. In other words, to repair a vehicle so that it is in substantially the same functional condition it was pre-accident, or if instead the policy requires Farmers to repair a vehicle so that it has the same value it had pre-accident. The policy in this case said liability for loss cannot exceed “[t]he amount which it would cost to repair or replace damaged [...] property with other of like kind and quality, or with new property less an adjustment for physical deterioration and/or depreciation.” Farmers argued that “diminished value” loss was excluded by its limits of liability and payment of loss provisions and that a car is either a total loss, or it is repairable, and that an insurer meets its obligation to repair when it returns the vehicle to a good and useable condition. The court ruled that because the average consumer would read a “repair or replace” policy to provide coverage of equal value when a car is repaired, replaced, or “totaled,” the coverage provision encompasses diminished value loss, and the limits of liability and payment of loss provisions do not unambiguously exclude it.
Washington Practice Series, Pattern Jury Charges states that the measure of damages to personal property is: The lesser of the following: (1) The reasonable value of necessary repairs to any property that was damaged; or (2) The difference between the fair cash market value of the property immediately before the occurrence and the fair cash market value of the unrepaired property immediately after the occurrence. 6 Wash. Prac., Wash. Pattern Jury Instr. Civ. WPI 30.11 (6th ed.). No other court decisions, statutes, administrative regulations or other authority regarding allowing or disallowing claims for diminution in value of a damaged vehicle in a third-party claim.
An informational letter from the West Virginia Offices of the Insurance Commissioner dated November, 2001, withdrew a previous information letter dated August, 2001, which outlined policy exclusions for diminished value, first-party or third-party. West Virginia Informational Letter No. 137 (Aug. 2001). This informational letter was originally written in response to Ellis v. King, 400 S.E.2d 235 (W.V. App. 1990). However, according to a 2/2/15 telephone conversation with Victor Mullins, Associate Counsel with the West Virginia Insurance Commissioner’s Office, the August, 2001 informational letter went a little too far, suggesting the Ellis holding extended to first-party claims, when this is not the case. It would appear that there currently is no authority authorizing first-party claims for diminution in value under auto policies. No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
The West Virginia Supreme Court, stated that “[i]f the vehicle looked and operated substantially the same after the accident but its market value had been diminished by the fact of being in an accident, then to be adequately compensated, the injured party must receive, in addition to the cost of repairs, the diminution in market value stemming from the injury”, but this should be narrowly construed with proof of the diminished value, structural damage to the vehicle, and only for a vehicle with “significant value” prior to the accident. Ellis v. King, 400 S.E.2d 235 (W. Va. 1990).
Insurance policy limits of liability provision permitted insurer to choose to repair vehicle, even if all possible repairs would not restore vehicle to its pre- collision market value. Insurer is not required to pay for diminished value following adequate repairs. Wildin v. Am. Family Mut. Ins. Co., 638 N.W.2d 87 (Wis. App. 2001).
Plaintiffs may be “entitled to either the reasonable cost of repairs or the diminution in fair market value of the vehicle, whichever is less.” However, an owner is entitled to cost-of-repair damages and loss-of-value-after-repair damages if the owner proves that the repairs to the vehicle did not restore the vehicle to its pre-injury value. Paulson v. Allstate Ins. Co., 649 N.W.2d 645 (Wis. App. 2002); Hellenbrand v. Hilliard, 687 N.W.2d 37 (Wis. App. 2004).
In a construction defect claim, the Wyoming Supreme Court has found that diminution in value was an element of damage in an inverse condemnation case. Miller v. Campbell County, 901 P.2d 1107 (Wyo. 1995).
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