The concept of money damages for “diminished value” (beyond the cost of repair) as a result of repairs to a motor vehicle following an automobile accident is becoming more widespread and more well known.
Assume that as you were driving your two year old vehicle with a fair market value of $20,000 you are involved in a serious collision which was not your fault. Repairs to your vehicle will cost $18,000 and your automobile insurance carrier is unwilling to declare your car a total loss. The repairs are made and the car is returned to you (and your deductible is repaid). Unfortunately, you learn that the fair market and true value of your vehicle, with a CARFAX designation of “major accident with airbag deployment” is not more than $16,000. In summary, as a result of a car accident which was not your fault, you have suffered an actual financial loss of $4,000. Welcome to the world of “diminished value.”
You can probably forget trying to recover the diminished value from your own insurance carrier as virtually all policies of automobile insurance in Pennsylvania restrict your right of recovery for repair to the actual repair cost of returning the car to “substantially” the same condition it was in before the accident. Specific policy language will usually prevent a successful claim. All is not lost however, as the law is not clear as to whether the other driver’s insurance carrier may be responsible to reimburse you for the $4,000.
The burden of proving damages is always on a plaintiff; however mathematical exactitude is often impossible and is not required. The plaintiff has the burden to persuade the jury or the fact finder that the vehicle’s value has in fact been diminished despite the fact that it has been “fully” repaired. There are now expert witnesses and engineering companies that specialize in providing this information (for a fee — around $450).
In State Farm Mutual Automobile Insurance Company v. Mabry, the Georgia Court specifically recognized diminished value as a proper claim. To the contrary, in Davis v. Farmers Insurance Co. of Arizona, the Court in New Mexico specifically rejected diminished value as a proper claim for damages.
In the recent case of Alexander v. Bailey, the Connecticut Superior Court decided a preliminary motion in favor of allowing a plaintiff to claim diminished value against another driver in circumstances similar to those described above.
The Supreme Court of Pennsylvania has not clearly decided the issue, and traditional proofs of damages will be still required in automobile cases. This means that nobody knows for certain whether diminished value claims will be honored here.
If you find yourself in a diminished value situation, there is no harm in making a request for a payment. Our firm recently handled a Pennsylvania collision case in which a diminished value payment of approximately $5,500 was made to our client by an insurance company on behalf of a negligent driver.
If you have any questions about “diminished value” please give us a call.
— Bill Brennan