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WORK PRODUCT OF MATTHIESEN WICKERT  LEHRER S WORK PRODUCT OF MATTHIESEN WICKERT  LEHRER S

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C Page Last Updated 32415 MATTHIESEN WICKERT LEHRER SC 1111 E Sumner Street PO Box 270670 Hartford WI 53027 Phone 262 673 7850 Fax 262 673 3766 gwickertmwl lawcom wwwmwl awcom DIMINUTION IN VALUE CASES IN ALL 50 STATES When a n automobile ID: 77192

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WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 1 Last Updated 4/28/20 MATTHIESEN, WICKERT & LEHRER, S.C. Hartford ❖ New Orleans ❖ Los Ang eles ❖ Austin Phone: (800) 637 - 9176 gwickert@mwl - law.com www.mwl - law.com DIMINUTION IN VALUE CASES IN A LL 50 STAT ES When a n automobile is damaged in an accident and then repaired, the resale value may be less than a comparable automobile that has not been damaged. In other words, the damage results in a reduction or “diminution” in the resale value of the au to mobile . An insured’s claim for this reduction in value may be made against a third party that negligently caused the damage to the insured’s auto mobile , or it may arise from a first - party claim against the insured’s own physical damage coverage. The t e rm “dimini shed value” can be confusing . T here are three types of diminished value: 1. Immediate Diminished Value : This is the loss of value which results immediately after an accident before any repairs are made. It is the difference in market value immediat e ly before and after an accident caused by a negligent tortfeasor. 2. Inherent Diminished Value : Also known as “residual diminished value”, t his refers to the loss of value of an auto mobile that remains after it is completely and professionally repaired. It i s the loss of value that results from the simple fact that the vehicle has been in an accident. This type of diminished value is also known as “stigma damage.” Given two identical vehicles on a car lot, the one never damaged is preferable to the one that h as been da maged and repaired . 3. Repair - Related Diminished Value : This refers to the additional loss of value to a vehicle that results from incomplete or poorly performed repairs. It could include simple cosmetic damages which remain after repair or major m e ch anical o r structural deficiencies. The most common and widely used form of diminished value is Inherent Diminished Value. This is the diminished value referred to and made the subject of this chart. In addition, there are two types of diminished value c la ims, bot h of which are discussed in this chart: 1. First - Party C l aims : These are claims made by the vehicle owner /policyholder against his or her own insurance company to recover the difference in the value of the vehicle before the collision and value of t he vehicle after the damage caused by collision had been repaired. This type of claim is usually governed by contract law and the terms of the insurance policy. When a vehicle is damaged, a policyholder generally expects t o be “made whole” by its first - pa r ty propert y insurer , but an insurer is legally responsible only to pay according to the terms of the policy . 2. Third - Party Claims : These are claims made by the owner of a vehicle against a third - party tortfeasor (person other than the insured and insurer) f o r negligen tly causing damage to the owner’s vehicle. This type of claim is governed by tort law. First - Party Claims In the typical first - party claim , property damage is traditionally determined based on an amount which is the least of actual cash value ( A C V), repair, or depreciation. With first - party coverage, auto carriers have historically take n the position that current vehicle policies were never intended to cover diminished value. Typical policy language provides coverage for “ direct and accidental l o s s of, or damage to, the vehicle .” The industry argument is that diminished value is an indirect loss and would not be covered . In 2001, the Georgia Su preme Court decided a case which challenged this viewpoint. In State Farm Mut. Auto. Ins. Co. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 2 Last Updated 4/28/20 v. Mabry , 5 5 6 S.E.2d 114 (Ga. 2001) — sometimes regarded as the first diminution in value case — t he Georgia Supreme Court interpreted “loss” to include residual diminished value (after repairs were property and professionally completed to the vehicle) . State Farm was o r d ered to pay $150 million in attorneys’ fees and settlement costs and to develop a clai ms handling procedure to evaluate and pay first - party diminished value claims. The court held that the issue as to w hether diminution in value of an automobil e occurs e v en when physical damage is properly repaired is one of fact when an insured sues it s auto carrier to recover for diminution in value . On November 29, 2001 — the day after the Georgia decision in Mabry — the Wisconsin Court of Appeals decided Wiscon sin’s own f irst - party diminution in value case. In Wildin v. American Family Mut. Ins. Co ., 638 N.W.2d 87 (Wis. Ct. App. 2001) . The court affirmed a trial court’s grant of the insurer’s motion to dismiss the insured’s complaint against the insurer for failure to pay residu al dimin ished value in addition to repair costs. The insured argued that despite the repairs, no repair could have restored the vehicle to pre - loss condition because of unibody structure and/or frame damage. The court disagr eed with the insured, hol d ing th at the policy language only required the carrier to pay for all ne cessary “repairs” and “repair,” given its ordinarily understood meaning, and t his did not mean the carrier had to restore t he vehicle to its pre - loss value . Diminished value litigatio n swept the country, and carriers responded by tweaking their policy lang uage. Some included diminished value exclusions, while others added endorsements which clearly set forth that the def inition of “ loss ” did not include any differen ce in the residual m a rket v alue of the vehicle after repairs. In arriving at the correct measure of damages in a first - party claim to recover under an automobile collision policy, such a claim is not a s uit for damages, but a contract claim based on the terms of the insuran c e policy . T herefore , the measure of damages applied in a lawsuit based upon an alleged tort is not the correct rule to be applied . T he language and terms of the insurance policy sue d upon m ust prevail, and such language, so far a s applicable to the questio n , must determine the rule as to the measure of damages to be followed. With regard to first - party claims, the Insurance Services Office (ISO) contract language (specifically the Li mit of L iability Condition) arguably appears to cover only the Actual Cash V alue (ACV) of the damage or the actual cost to repair the damage. There is often nothing in the policy language that would contractually cover any reduction in market value, even i f the in sured were able to prove the amount of r eduction in value. On the o t her hand, the policy clearly allows the insurer to deduct for “betterment” or depreciation, although the burden of proof is on the insurer to demonstrate such depreciation or bette rment. I n physical damage claims, the policy all ows the carrier to deduct f o r an “improvement” in value ( i.e. , betterment) due to repairs with newer parts, but will not compensate the insured for a reduction in value due to the same acc ident. There is a di sparity among the various states regarding recov ery of diminution in value i n first - party cases. Insurance claims professionals should be aware of when and how the laws of each state deal with diminution in value. Georgia is in the minority of states that require insurers to pay the diminished value as well as the cost of repair o f an auto mobile when the policy covers “actual loss or damage”, even if the insured does not make a claim for the diminished value. I n some states, a distinction is made between “ diminish ed value” and “stigma damages.” “Diminis hed v alue” is what a vehicl e suffers when it sustains physical damage in an accident but , due to the nature of the damage s , cannot be fully restored (via repairs) to its pre - loss condition. An example is weak ened ste el in the vehicle. “Stigma d amages” occu r when a vehicle has been f u lly restored to its pre - loss condition, but it carries an intangible taint due to its having been involved in an accident. Moeller v. Farmers Ins. Co. of Washington , 267 P.3d 998 ( Wash. 20 11). Stigma damages are generally disfav ored. Some states have reso l ved this question through statute, while many others have authorized policy language that expressly excludes diminished value coverage. Where a policy gives the insurer the option of compe nsating loss by either money or repair o r replacement - but, does n o t a llow a combination of the three, the majority rule is that payment of diminished value is not required by a “ repair or replace” policy because repair unambiguously encompasses o nly a co ncept of tangible, physical value , see , e.g. , Sims v. Allstate Ins. Co., 851 N.E.2d 701 (Ill. App. 2006) , or because a reading that encompassed value would eliminate an insurer ’ s option to either repair or compensate with money. See , e.g. , O’Brien v. Progr essive N. Ins. Co., 785 A.2d 281 (Del. S uper. 2001) . The minority r u le is that, because the average insurance consumer would read a “repair or replace” policy to provide coverage of equal value when a car is repaired, replaced, or “totaled,” the co verage p rovision encompasses diminished value lo ss, and the limits of liabi l ity and payment of loss provisions do not unambiguously exclude it. Moeller , supra . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 3 Last Updated 4/28/20 Third - Party Claims Unlike first - party claims, a third - party diminished val ue claim involves a tort claim and/or lawsuit filed by a veh icle ow ne r or subrogated carrier aga i nst a tortfeasor responsible for causing damages in an acc ident. Each state evolved its own law of damages over time. In Wisconsin , for example, the tort measure of damages to repairable property was the lesser of ( 1) repairs co sts , or ( 2) the differ ence b etween fair market value of the property immediately before and immediately after the loss. In Wisconsin, the Supr eme Court r eje cted the blanket “ lower of the two ” rule and announced that in certain cases, it is possible to have both types of damages. Hel l enbrand v. Hilliard , 687 N.W.2d 37 (Wis. App. 2004) . The Supr eme Court noted that, despite having previously assumed that if property is repairable, then repairing the property makes the plaintiff whole , it relied on a “collapse d basement” case to extrapo l ate that the mandated disclosure of an adverse condition to prospective purchasers could impair market value of the property. If an owner prove s that repairs did not restore the vehicle to its pre - injury value , residual d iminuti on in value could be recove r ed as an element of tort property damages. In third - party claims for property damage to automobiles because of a collis ion for which a third party was at fault, the measure of damages is traditionally — but not always — the d ifference between the market valu e before and after the collision ( “diminution of value” ) or the reasonable repair value – whichever is greater. Such third - pa rty diminution claims have generally been found by the courts to be covered by auto mobile insuranc e since the measure of damage in t ort claims (which the insurer promises to pay) is the difference in the value of the property before the loss and th e value of the property after the loss. For example, Texas court cases have found that legal liability for third - party damages includes dim i nution in value. Ludt v. McCollum , 762 S.W.2d 575 (Tex. 1988); Terminix Int’l, Inc. v. Lucci , 670 S.W.2d 657 (Tex. A pp. 1984 ). In New Jersey, however, the measure of damages is the difference between the market value of th e vehicle before and after the da m age occurred. However, if the vehicle is not substantially damaged and it can be repaired at a cost less than the di fference between its market value before and after the damage occurred, the plaintiff’s damages would be l imited to the cost of the repairs . Jones v. Lahn, 63 A.2d 804 (N.J. 1949). Both the cost of repair and diminution in value ha ve traditionally been rega rded as acceptable methods of proving the amount of damage to property in third - party cases. In R & Y, Inc . v. Municipality of Anchorage , 3 4 P.3d 289 (Alaska 2001), the Alaska Supreme Court used “diminution in value” as a method of establishing tort damage s. The R estatement of Torts § 928 states as follows: “ Where a person is entitled to a judgment for harm to chattels not amounting to a to t a l destruction in value, the damages include compensation for: (a) the difference between the value of the chattel bef ore the harm and the value after the harm, or at the plaintiff’s election, the reasonable cost of repairs or restoration where feasible, w i th due allowance for any difference between the original value and the value after repairs . ” The following states all ow recov ery for diminution in value of a damaged vehicle in a third - party claim. Arizona: Farmers Ins. Co. v. R.B.L. Investment, Inc., 67 5 P.2d 1381 (Ariz. 1983); Colorado : Trujillo v. Wilson, 189 P.2d 147 (Colo. 1948); Airborne v. Denver Air Center, 832 P .2d 1086 (Colo. App. 1992); Florida: McHale v. Farm Bureau Mut. Ins. Co., 409 So.2d 238 (Fla. 1982); Georg ia: Perma Ad Ideas v. Mayville, 2 82 S.E.2d 128 (Ga. 1981); Illinois: Trailmobile Division v. Higgs, 297 N.E.2d 598 (Ill. 1973); Indiana: Wiese - GMC v. Wells, 6 26 N.E.2d 595 (Ind. 1993); Iowa: Halferty v. Hawkeye Dodge, 158 N.W.2d 750 (Iowa 1968); Kansas : Br oadie v. Randall, 216 P. 1103 ( K a n. 1923); Louisiana: Orillac v. Solomon, 765 So.2d 1185 (La. 2000); Maryland: Fred Frederick v. Krause, 277 A.2d 464 (Md. 197 1); New Mexico: Hubbard v. Albuquerque, 958 P.2d 111 (N.M. 1998); New York: Rosenfield v. Choberka , 529 N.Y.S.2d 455 (N.Y. 1988); O regon: EAM Advertising Agency v. Helies, 954 P.2d 812 (Or. App. 1998); South Carolina: Newman v. Brown, 90 S.E.2d 649 (S.C. 1 955); and Virginia: Averett v. Shircliff, 237 S.E.2d 92 (Va. 1977). It should be remembered that d iminution in value of a vehicle a fter repairs have been conducted can be difficult to prove and, in some states, the burden is quite high. EAM Adverti sing Age ncy v. Helies, supra . In some cases, it may be necessary to actually sell it in its damaged condit ion in order to establish its p o s t - crash market value or, at a minimum, engage an expert appraiser to provide a detailed report. Formula for Determin ing Dimi nished Value Claims In states where diminished value claims are allowed and pursued, expert testim ony on the value of a vehicle r e m ains the main avenue for proving such claims. However, an industry which thrives on simplicity and predictability has made efforts t o arrive at a functional uniform formula for calculating such claims. In State Farm Mut. Auto. Ins. Co. v. Mabry , 556 S.E.2 d 114 (Ga. 200 1 ) , the Georgia Supreme Court reviewed a class action suit involving thousands of individual first - party WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 4 Last Updated 4/28/20 inherent dimin ished va lue claims and took the initiative to arrive at a formula known as “The 17(c) F ormula.” State Farm sampled thousand s of claims fr o m the class to determine the best of many formulas available at that time . The 17(c) f ormula, based upon a previous re gulation issued by the Georgia Insurance Commissioner ’ s office and used by Safeco, Progressive, Nationwide , and Crawford & C o., resulted i n the lowest calculation and was the easiest to calculate. Under the 17(c) f ormula, a vehicle ’ s Base Loss in Value (10 % of the N ational A utomobile D ealers A ssociation (NADA) retail value) is multiplied by mileage and subject ive damage modifi e rs ( severe, m a j or, moderate, minor, and no structural damage ) based on the vehicle’s mileage and the amount of damage it sustained. So, for example, if a vehicle valued at $16,000 with 50,000 miles sustained moderate damage, its diminishe d value would be c alculated as: $ 1600 x.50 (moderate damage modifier) x.60 (mileage modifier) for a diminished value of $480. However, t his formula wa s for us e in a class action suit and hasn’t been formally adopted for general use. Many contend it arbitra rily assign s diff e rent modifier s based on mileage and damage and that a vehicle’ s NADA value already takes mileage into consideration, making the mile age modi fier a double penalty. In addition, it is felt that the damage modifier should be based on the cos t to repair, not s ome arbitrary s cale of 0 - 1. Many people also contended that a vehicle must be physically inspected in order to determine its post - ac cident v alue, and the 17(c) f ormula is not based on a physical inspection. Despite its flaws, the 17(c) f o rmula offers an e a sy and unifor m way of assessing diminished value and is used by many insurers in Georgia today. The Georgia Court of Appeals has held that it is not bad faith for a first - party insurer to use this formula to calculate a diminished value claim. Amica Mut. I ns. Co. v. Sanders , 779 S.E.2d 459 (Ga. App. 2015) . Other states, such as North Carolin a , on th e other hand, uses a variety of methods to determine diminished value, including the ClaimCoach.co m system and the Classic Car Ap p r aisal Service (Don Peterson) m ethodology, in addition the 17(c) f ormula mentioned above. North Carolina has actually passed a statute which outlines the procedure for a policyholder to have a first - party diminished value cl aim. N.C. Gen. Stat. Ann. § 20 - 2 7 9.21(d)(1) provides that, if a n 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 app raise the loss. If they cannot a g ree on a number, then a third - party umpire is called to determine the diminished value, whose report is binding on th e partie s. Though time - consuming, this method avoids the criticism of the 17(c) f ormula and keeps the part ies out of court. The correct w a y to prove diminished value cl a ims was followed in Canal Ins. Co. v. Tullis , 515 S.E.2d 649 (Ga. App. 1999), involves two opti ons: (1) th e difference of the fair market value pre - and post - collisions; and (2) t he reasonable cost of repairs, together with l o ss of use and the value of an y additional permanent impairment, provided that the aggregate of such amount does not e xceed th e fair market value before the collision. The following is a summary of how the first - party and t hird - party Inherent Diminished V a lue Claims are treated in all 50 states. STATE FIRST - PARTY THIRD - PARTY ALABAMA An insurer may not be required to compensa te the insured for the difference in the vehicle’s value before the collision and the vehicle’s va lue after the damage caused by the c ollision ha ve been repaired. P ritchett v. State Farm Mut. Auto. Ins. Co ., 834 So.2d 785 (Ala. App. 2002) . W here a policy o f insurance provides that the insurer ’ s liability for loss or damage to the property insured shall not exceed “what it would cost to r epair or replace the auto or p arts thereof with others of like kind and quality” the insured is entitled to recove r only t he cost of such repairs or replacements. Home Ins. Co. of New York v. Tumlin , 2 So.2d 435, 437 ( Al a. 1941) . There appear to be no ca s e decisions allowing for recov e r y of the residual diminution in value of a repaired vehicle in a third - party claim. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 5 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY ALASKA Courts use diminu tion in value in establishing the amount owed in a condemnation proceeding, but currently no Alaska cases are avai l a ble that deal with a claim fo r 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) . A r e s i d u a l d iminished value c l a i m is f o r the difference between the pre - accident value of a v ehicle and its value after re p a irs. In Willett v. State of Alaska, 826 P.2d 1142 (1992) , a c r i m i n a l m i s c h i e f c a s e , the court a c k n o w l e d g e d t h a t R e s t a t e m e n t ( S e c o n d ) o f T o r t s § 9 2 8 h a s i n t e r p r e t e d s u c h t h a t where repairs have not restored damaged property t o its original value, recovery has been allowed for both cost of repairs and the difference in market value before the damage and after the repair. W h i l e i t d o e s n o t d i r e c t l y a u t h o r i z e d i m i n u t i o n i n v a l u e d a m a g e s i n A l a s k a , i t d o e s r e c o g n i z e t h e c l a i m i n o t h e r j u r i s d i c t i o n s . ARI ZONA A rizona does not allow for first - party recovery, as the cour ts have determined that a n insured’s measure of d amages i s not the difference in the market value of the auto immediately before and after the collision. J ohnson v. S t ate Farm Mut. Auto. Ins. Co ., 754 P.2d 330 (Ariz. App. 1988) . Courts agree with j urisdict ions that have “ generally held that the measure o f compen sation to the owner of a negligently damaged motor vehicle may include the cost of repair and prov en residua l diminution in fair marke t val u e. ” Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 138 Ari z. 562, 564, 675 P.2d 1381, 1383 (Ariz. Ct. App. 1983) . “ When the property is repaired or restored, however, the measure of damages includes the cost of re pair with d u e allowance for any diff erenc e between the value of the property before the damages and t he value after repairs , as well as the loss of us e. ” Oliv er v. Henry , 227 Ariz. 514, 516 - 17, 260 P.3d 314, 316 - 17 (Ct. App. 2011) ( citing Restatement (Seco nd) of Tor t s § 928 (1977)). ARKANSA S Cou r ts have stated that Arkansas has maintained that the “measu re of damages to personal property is the differe nce in t he fair market value of the property immediately before and immediately after the occurrence , ” and that “the r easonable cost of repair s may be considered in determining this difference.” Daughhetee v . Shipley , 669 S.W.2d 886 (Ark. 1984) . T he measur e of dam ages is the difference between the value of the vehicle immediately before and after the accident . However, w h en proving damages for a vehi c le not a total loss, the difference in fair market value ma y be established by the reasonable cost of repair ing the damaged property. Crooms v. Capps , 274 S .W.3d 364 ( Ark. App. 2008) . I f repairs do not substantiall y restore v e hicle to its former cond ition and value, the proper measure of damages is the difference in value before the accident and after the accide nt and r epairs. MFA Ins. Co. v. Citizens Nat. Bank of Hope , 545 S.W.2d 70 ( Ark. 1977) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 6 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY CALIFORNIA D epends on policy l anguage. Courts have hel d tha t , where damaged auto was repaired to “its pre - accident safe , mechanical, and cosmetic condition , ” an i nsurer’s obligation to repair to “ like kind and quality ” i s discharged according to the insurance policy . A court will not r ewrite an otherwise unam biguo u s limitation of collision coverage to provide for a risk no t bargained for. When carrier repairs car t o its pre - accident condition, it ’ s not also required to pay for any loss of value to vehicle, which can occur after a seri o u sly damaged vehicle is f ully r epaired. (Croskey , et al ., Cal. Practice Guide: Insurance L itigation, supra, ¶ 6:2025, p. 6G - 4.) . “To hold [the insurer] liable for the automobile’s diminution in value... would render essentiall y meaningless its clear right t o elect to repair rather than to pay the actual cash value of the vehicle at the time of loss.” Ray v. Farmers Ins . Exc h ., 200 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988). If a policy covers “damages f or property damage for wh ich an insured person is lega l l y liable because of an a ccide n t.” “Property damage” is defined as “physical damage to tan gible property, including dest ruction or loss of its use.” Although diminution in value is not itself a form of physical damage, it is a n accepted way of measuring d a m age and , therefore , shou ld be paid . Copelan v. Infinity Ins. Co. , 2018 WL 2714588 (9 th Ci r. 2018) . An insurance policy which states that “ … at [defendant ’ s] optio n” it ma y “pay for a loss less any depreciation” or, alternative ly, “repair or replace any da m a ged or stolen property w ith l i ke kind and quality less any depreciation” expressly exclud es coverage for “any diminutio n in the value ” If an insurer opts to repa ir a veh icle rather than declare it a loss and pay i ts pre - accid ent value, the insurer ’ s obli g a tion to insured is disch arged if those repairs return the car to its “pre - accident safe, mechanical, and cosmetic c ondition.” This does not require restorati on to “p ristine factory condition ” or to its pre - acc ident market value . Foster v. Interinsurance E x change , 2018 WL 1980943 (Cal. App. 2018). Where insurance policy contains no provision r equiring carrier to pursue insured ’ s diminished value claim or wa it to assert its subro claim , there ’ s no bad fait h or breach of contract. I nsurer does n ’ t need to co n s ider diminished value in elec t ing to repair vehicle. Carson v. Mercury Ins. Co. , 210 Cal . App.4 th 409 ( Cal. App. 2012) (finding in surance company ’ s “failure to take into acco unt vehi cle ’ s depreciation in value when opting to repair vehicle cannot be deem e d against public policy o r cov e nant of good faith”). Copelan v. Infin ity Ins. Co. , 192 F. Supp.3d 1063 (C.D. Ca l. 2016) . T his issue is confus ing in C alifornia. While n o court decisions regarding recovery allowed for diminution in value of a damaged vehicl e in a third - party claim , the n e w jury instruction for auto property d amage seems to allow a jury to award it . Recovery for third - party proper ty damag es is limited to the diffe rence between the FMV of the vehicle before the loss and its value after the los s . Ray v. Farmers Ins. Exc h. , 2 0 0 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988); Moran v. Cali fornia Dep’t of Motor Vehicles , 139 Cal. App.4 th 68 8 (Cal. App. Dist. 4, 2006). T he C alifornia Jury Instruction (CACI - 3903J, 2017) , reads in part as follows: However , if you find that the [e. g. , a u tomobile] can be repaired, but after r epairs it will be wor th less than it was before the harm, the damages ar e (1) th e difference between its v alue before the harm and its lesser value after the repairs have been made plus ( 2 ) the reasonable cost of maki n g the repairs. The total amount awarde d may not exceed the [e.g., automobile] value before the harm occurred. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 7 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY COLORAD O “When an automobile insu rer promises to provide an insured with a vehicle ‘of like kind and quality,’ th e insurer must provide the insu r ed, through repair, replacement, and/o r compensation, the m eans of acquiring a vehicle substantially similar i n functi on 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 ) . Co u rts have held that “the measure of dam age is the difference between its value immediately before its damage an d immedi ately thereafter, together with any expense of reasonable efforts to preserve or restore it.” Trujillo v. W i lson , 117 Colo. 430, 434 , 189 P.2d 147, 150 ( Colo. 1948) ; Larson v. Long, 219 P. 1066 ( Co lo. 1923) (permitting “admission of evidence of the [diminu tion] in value of defendan t's car because of its having been in the accident” because such “[diminution] i s an element of damage”) . CONN E CTICUT The court has discretion to sel ect the repair measur e which stands in as a substitution for diminution in value caused by damage to prope rty. There are currently no cases available dealing with insurance recovery as d i f ferentiated from tort re cover y . Willow Springs Condominium Ass’n, In c. v. Seventh BRT Dev . Corp. , 245 Conn. 1 (Conn. 1998) . Plaintiff is ent itled to recover the reasonable re pair costs and any residual diminution in value. Littlejohn v. Elionsky , 36 A.2d 5 2 (Conn. 1944) ; Stults v . Pal m er , 141 Conn. 709 (1954); Damico v. Da lton , 1 Conn. App. 18 6 (1984); Papenheim v. Lovell , 530 N.W.2d 52 668, 6 72 (Iowa 1995 ); Alexander v. Baile y , 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 181 4279 ( Conn. 2014); Bartnick v. Stehr , 2014 WL 50943 32 ( Conn . 2014). DELAWARE Delawar e Superior Court briefly determined that the majority of jurisdictions requiring t he insurer to pay for di minut i on in value i s the better view . H oweve r , the Delaware Supre me Court overruled that decision by holding that: “ We concl ude that the language ‘ rep air and replace ’ is not ambiguous and that this language does not contemplate pa y m ent for diminution of va lue.” Delledonne v. State Farm Mutual Ins. C o., 621 A.2d 350, 352 (Del. Super. Ct. 1992) ; O’Brien v. Progressive Nor thern In s. Co ., 785 A.2d 281 (Del. 2001) . No court decisions regarding recovery allowed for diminution in value o f a damaged vehicle in a t hird - p arty claim. DISTRICT OF COLUMBIA D.C. courts have allowed for a tort remedy, but they have not addressed the issue wh en it involves the coverag e available under a n insurance policy. Other jurisdictions were referenced when t h ey determined that “ reco very m ay be had for both the reasonable cost of repair and the re sidual diminution in value after repair, provided t hat the award does not exceed the gross diminution in value .” American Service Center Associates v. Helton , 867 A. 2 d 235 (D.C. 2005) . No cou rt de c isions regarding recovery allowed for diminution in value o f a damaged vehicle in a third - party claim. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 8 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY FLORID A Courts have held that that an au to collision policy which provides that the insurer must repair or replace the d a m aged vehicle “with other of l i ke kind and quality” does not require the insurer “to compe nsate the insured in money for any diminution in ma rket val ue after the insurer compl etes a first - rate repair which returns the vehicle to its pre - accident level of p e rformance, appearance, a nd fu n ction.” Siegle v. Progressive Consumer s Ins. Co ., 819 So.2d 732 (Fla. 2002) . Florida courts have held that “th e cost o f the repairs made plus th e diminution in value will ordinarily be the proper measure of damages, with the b urden on the plaintiff t o pro v e in addition to the cost of repairs, that he suffered the additional damage of diminution of value by the veh icle hav ing been involved in the a ccident.” McHale v. Farm Bureau Mut. Ins. Co. , 409 So. 2d 238, 239 (Fla. Dist. Ct . App. 1982) ; Airtech Serv ., In c . v. MacDonald Constr. Co. , 150 So.2d 465 (Fla. App. 1963) . I n McHale , Florida ’ s Third District Court of Appea l descri bes Airtech as “not a ‘cos t - of - repair’ case, but a ‘total destruction’ case.” McHale , 409 So.2d at 239 . It i s not necessary for the vehic l e to be sold before damage for diminis hed value is realized and can be recovered. Meakin v. Dreier , 209 So.2d 252 (Fla . App. 1968) . GEORGIA The Georgia Supreme Court decided wh at is probably the semina l case in the country r e garding first - party dimi nutio n in value cases. In State Farm Mut. Auto. In s. Co. v. Mabry , 556 S.E.2d 114 (Ga. 2001) , the court determined that the public policy of Georg ia requires insurers to pay the diminished value , as well as the cost of repair o f a n auto , even if the insure d doe s not make a claim for the diminished value , i f the terms of the policy are like 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 diminutio n i n value . In an action by t he ow n er of personal property, such as an a utomobil e, to recover for loss or damage sustained by him because of a tortious injury thereto, the mea sure of damages is to be determined under general principles of law. In a su it on a c ontract, as a policy of insur a nce, whereby the owner is insured against actual loss or da mage to an automobile by collision, the measure of the insurer ’ s liability will be determined according to the terms of the contract. In a more recent case, the i nsu r e d c ould seek both costs of re p air to a building and any post - repair diminution in buildin g ’ s va lue resulting from damage . Royal Capital Dev ., LLC v. Maryland Cas. Co. , 728 S.E.2d 234 ( Ga. 2012) . Damages to a motor vehicle may be proven either by showing difference between fair market v alue of vehicle before collision and market value after collision, or by proof of reasonable value of labor and material used for necessary repairs that are the direct and proxima te result of collision, together with loss of use , plus the value of any per m anent impairment in the value of the vehicle . Myers v. Thornton , 480 S.E.2d 334 (Ga. App. 1997) . G eorgia courts have found that in a third - party action “ [t] h e me asure of damages in a n act ion to recover for injuries to a motor vehicle … is the diffe rence be t w een the value of the vehicle before and after th e collision or other negligence” or in a case where the owner repairs the vehicle, damage can be shown b y “ t h e r easonable value of la bor a nd material used for the repairs and the value of any deprec iation ( p e rmanent impairment) after the vehicle was repaired, provided the aggregate of th ese amounts does not exceed the value of the vehicle before the injury.” Pe r m a A d Ideas of Am., Inc. v. Ma yville , 158 Ga. App. 707 (1981) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 9 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY HAWAII Hawaii courts have used d im i n ution in value to establish value for the purposes of condemnation, along with u sing diminution as the method of establishing values for loss to real pr ope r t y. County of Kauai v. Pa cific Standard Life Ins. Co ., 653 P.2d 766 (Haw. 1982) ; Clog Hold ings, N. V . v. Bailey, 992 P.2d 69 (Haw. 2000) , Opinion Ordered Depublished (April 20, 2000 ) . No court decisions regarding recovery allowed for diminution in valu e o f a d amaged vehicle in a t hird - party claim. IDAHO Idaho courts have addressed diminution b y spea ki n g 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 7 6 8 ( Idaho 2002) . No court deci sions regarding recovery allowed for diminution in value of a dama ge d vehicle in a third - party claim. ILLINOIS Evidence of diminution in value will l ead to coverage for property damage even though there was no physical in jur y . Al leged diminution in v alue of homes from installation of plumbing system was not “physi cal in ju r y to tangible property,” within meaning policies . Traveler’s Ins. Co. v. Eljer Mf g., Inc., 757 N.E.2d 481 (Ill. 2001) . Illinois courts have also held th at “ [ t] o expand the ordinary meani ng of ‘repair or replace... with other of like kind and qual ity’ t o i n clude an intangible, diminished - value element would be ignoring the policy’s lan guage or giving the policy’s text, a meaning never intended.” Sims v. Al lst a t e I ns. Co., 851 N.E.2d 7 01 (I ll. App. 2006) . The term “like kind and quality,” means “suf ficien t t o restore a vehicle to its pre - loss condition.” Use of non - OEM parts would not ne cessarily constitute a breach of the “like kind and quality” promise . Av ery v . S tate Farm Mut. Auto. Ins. Co. , 835 N.E.2d 801 (Ill. 2005) . Illinois courts have stated that “[ t ] he measure of damages for a repairable injury to personal property, is ordinaril y the cost of making the repair and the value of the use of the property wh i l e t he owner is necessari ly de prived of it by reason of the repair. If the property is wor th les s a f ter it is repaired than its value before the injury, the measure of damages is t he difference in the market value before the injury and in its repaired con d i tio n in addition to the reaso nable cost of repairs. ” Trailmobile Div. of Pullman, Inc. v. Higgs , 1 2 Ill. App. 3d 323 (1973) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 10 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY INDIANA Indiana Supreme Court has found that diminuti on in value may not be recovered by the insured of an auto policy and no ted t hat a policy may provide that the insurer may choose to pay either the actual cash value of the v e h icle 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) . A plaintiff in a third - party claim is entitled to recover both the cost of repair and inherent or “ residual ” dimini s hed value. Evidence of the FMV of the vehicle after repairs is required. Shield Global Partners - G1, LLC v. Forster , 2020 WL 811645 (Ind. App. 2020) . Indiana cour ts h a ve adopted the measure o f dam ages as in the Restatement (Second) of Torts , stating that “ t he fu nd a mental measure of damages in a situation where an item of personal property is da maged, but not destroyed, is the reduction in fair market value caused b y t h e ne gligence of the tortf easor .” Wiese - GMC, Inc. v. Wells , 626 N.E.2d 595 (Ind. Ct. App. 1 9 93) . Th i s includes the residual diminished value remaining after a vehicle is repaired but still hasn ’ t been restored to its pre - accident fair market value due to th e fact that the vehicle has been in an accident. Dado v. Jeeninga , 743 N.E.2d 291, 294 (In d . App. 2 001); Wiese – GMC, Inc. v. Wells , 626 N.E.2d 595 (Ind. App. 1993), trans. denied; Restatement (Second) of Torts § 928 (1977). I n suit for DIV under UIM policy , court said that because UIM policy was paying on b ehalf of uninsured tortfeasor, it also owed DI V damages. Dunn v. Meridia n M u t . I ns. Co., 836 N.E.2d 2 49 (I nd. 2005). IOWA Diminished value policy provisions rescinde d by I nsurance A djustment B ureau 4/28/ 0 4, effective 4/7/04. Iowa Admin. Code R . § 191 - 15.4 3(507B) . Diminished value after repair s may be recovered if supported by ex p e rt testimony and the evi dence , and the amount of diminished value damages lies within the sound discretion of the court or jury . Hawkeye Motors, Inc. v. McDowell , 541 N.W.2d 914 ( Iowa App. 1995) . KANSA S 10 th Circuit d ecision (Kansas law) says that a com m e rci al inland marine poli cy co vers post repair diminution in value of dealer ’ s automobiles that were damaged by hail and such co v erage was not defeated by “loss of market” exclusio n. Boyd Motors, Inc. v. Employers Ins. of Waus a u , 880 F.2d 270 (10 th Cir . 1 9 8 9) . When the repair of a n inj ury d oes not restore the property to its original condition and va lue but i s a reasonable effort t o make it as nearly usable as practicable, and as re paired i s not as valuable as it was be f ore the injury, the cost of the r epa i r to gether with the diffe rence in value of the repaired property and its value before inju ry mig ht in some cases be a fai r measu r e of the loss sustained. Broadie v. Randall, 216 P. 1103 (Kan. 1923) . Diminution in valu e damage s are coverable if the val ue a f ter repairs is less than it w as before the accident. Venable v. Import Volkswagen, Inc., 519 P. 2d 667 (Kan. 1974). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 11 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY KENTUCKY An insurer is required to restore the physical conditi on but not the value of the damaged au t omobile , which was previously fol low e d by the Court of Appeals in T omes v. Nationwide Ins. Co. , 825 S.W.2d 284 (Ky. App. 1991) and Ge neral Accident Fire & Life Assur a nce Corp. v. Judd , 400 S.W.2d 685 (Ky. 1966) . In 2018, the Court of Appeals applied the D I V rule w ith r egard to real property t o third - party vehicle damag es. Muncie v. Wiesemann , 548 S.W.3d 877 (Ky. 2018) . The recovery shall be the difference in value of t he property before the injury occurre d, and the value immediately after it is completed. T he afte r - val ue shall take into accou n t stigma damages, if any . Conrad v. Shrout , 2018 WL 3814610 (Ky. App. 2018). LOUISIANA The Louisiana Court of Appeals has held t hat “ the i nsurer’s obligation is sati sfied once payment is made for the full and adequate phys ica l rep air of a damaged vehicle … ” Campbell v. Markel American Ins. Co ., 822 So. 2d 617 (La. App. 2001 ) . Cl ass action against Prudential for failure to pay its in s ureds for post - repair diminished valu e. Court said insurer was not required to compensate insu red for post - repair diminished v a l ue of her damaged vehicle under “repai r or rep lace” language in pol icy l imits. Manguno v. Prudential Prop. & Cas. Ins. Co. , 276 F.3d 720 ( 5 th Cir. 2002) (Louisiana l aw). Another Court of Appeals case required proof o f dim inu t ion: “ diminution in value of a vehicle involved in an accident is an element of recoverable damag es if sufficiently established… where the measure of damages is the cos t of repair, additional dam ages for depreciation may be recovered for the dimin u tion in valu e due to the vehicle’s i n v olvement in an accident.” Defraites v. State F arm Mut. Auto. Ins. C o., 8 64 So.2d 254 (La. App. 2004) . Collision policy which sa y s insurer will repair or replace does not provide coverage for diminished value. Campbell v. M ark e l Am erican Ins. Co ., 822 So. 2 d 617 (2001) ; Townsend v. State Farm Mu tual Aut o. Ins. Co ., 793 So.2 d 473 (La. App. 2001). As of 2010, L.S.A. § 2800.17 (“ l iabil i ty for the diminution in the value of a damaged automobile”) governs third - party liabilit y for th e dim inution in the value of a damaged vehicle and provides: Whenever a motor vehicle is damaged t hroug h the negligence of a third - party without being destroy e d, and if the owner can prove by a pr eponderance of the evidence that, if the vehicle wer e rep air e d to its pre - loss condition, i ts fair market value would be less tha n its va lue before it was dam aged, the owner of the damaged vehicle shall be entitled to r ecover as additional damages an amoun t equal to the diminution in the value of the vehicl e . No twi t hsta nding, the total damages r ecovered by the owner shall not exceed the fai r market value of the vehi cle prior to when it was damaged, and the amount paid f o r the dimi nution of value shall be co nsidered in determining whether a vehicle is a total loss pu r suan t to R.S. 32:702 . L.S.A. § 2800.17 ; s ee also , Orillac v. Solomon , 765 So . 2d 1185 ( La. 2000) . Dimin ution in value due to flood damage to vehicle recoverab l e when, de spite repairs, flood - damage d vehicle suffered from residual odor. Rich v. Liber t y Mu tua l Ins . Co . , 798 So.2d 1201 (L a . App. 2001) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 12 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY MAINE An insurer’s liabi lity for a loss under the pol icy e xtends only to the loss that can be repaired as that te r m is commo nly understood. Because dim inution in value is a loss that cannot be repaired, a n or din a ry p erson would reasonably c o n clude that a claim for diminished valu e is not covered by the polic y. No coverage for DV because it is a loss that cannot be re p aired, the principle being that a val ue that cannot be restored is uninsurable ( e.g., aki n to the sent imental value of a famil y heirloom). Hall v. Acadia Ins. Co. , 80 1 A.2d 9 93 (Me. 2002). An own er or subrogated carrier may recover the difference in the v a lue of aut o before and after the acci dent. However, an auto insurance policy, which oblig a te s the insu rer to pay lesser of eit h e r actual cash value of vehicle at time of loss or amount necessary to re pair or replace vehicle, does not mandate liability for diminution in vehicle’s value due to accident despite repair, given that policy’s use of t erm “re p air” was unambiguous, and su c h diminution was not loss that could be repaire d. Collins v. Kelley , 179 A. 65 (Me. 1935). No court decisions regarding recovery allowed fo r diminution in value of a damaged vehicle in a third - party claim. MARYLAND Di m inut ion of v alue has been found to b e appropriate as a measure of damages in a conde mnation case. Reichs Ford Road Joint Venture v. State Roads Comm’n of the State H w y. Admin., 880 A.2d 307 (Md. 2005). M aryland courts have determined that “if [a] plaintif f can pr o ve t hat after repairs his ve h i cle has a diminished market value, the n he can recover in addition to th e cost of repairs the diminution in market value, provi d ed the two together do not exceed the diminution in value prior to the repairs.” Fred Fre d eric k M o tors , Inc. v. Krause , 277 A. 2 d 464 ( Md. 1971). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 13 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY MASSACHUSETTS Courts have st ated that they will u se us ual standards of contract interpretation and have held t hat “[n] o ‘objectively reasonable ins ured, reading the relevant policy language’ would co n clud e t h at t hese terms include compe n s ation for diminution in market value o r for an ything else beyond re stora tion of the vehicle’s pre - collision physical condition. ” Given v. Commerce Ins. Co. , 440 Mass . 207 ( Mass. 2003). In Roth v. Amica Mut. Ins. Co ., 7 96 N .E. 2 d 12 81 (Mass. 2003) , the cou r t followed Given, but noted that, “[i]n an appr opriate case, a plain tiff may successfully claim damages based on an insurer ’ s sp e cification of [use of] a substandard non - OEM part, or successfully demonstrate that the i n sure r ’ s duty to repair or replace ca n only be satisfied by the designation o f a part icular OEM part to re pair the specific damage to that vehicle . Th ere are parts of some vehic les where unique dimensions or specifications of the part are such that only a r epla cem e nt p art from the original ma n u facturer will suffice to restore the v ehicle t o its proper function ing c ondition. ” Roth ruled that DV is not covered, Given con t radicted t his ruling by stating that DV was “inherent” in physical damage claims. As a re s ult, De p uty Commissioner and General C ounsel Daniel R. Judson of the Massach usetts D ivision of Insurance issue d a May 2002 advisory opinion that stated that the Divi s ion ’ s posi tion was that the standard auto insurance policy does not provide coverage “ for so - c all e d ‘ i nherent diminished value , ’ nor has the Division ever intended th e langua ge to provide such co verag e. ” Judson added that there are no statutes or regulati o ns requiri ng insurers to pay claims f or diminished value, or rates to include a premium c h arge fo r dim inished value. I nherent diminish ed value is not owed to a third party on a repaired vehicle. Martins v. Vermont Mutual I n s. Co., 2019 WL 3818293 (D. Mass. 2019) (unpublished). MICHIGAN I nsurers ’ obl i gation und er auto policies to “repair or r e place” d id not require payment for diminution in va lue of v ehicle as result of acci d e nt, where provisions expressly limited coverag e to lesser of actu al valu e or cost of repair . Driscoll v. State Farm Mut. Auto. I ns. Co. , 2 27 F. Supp.2d 696 (E.D. Mic h. 20 0 2). No c ourt decisions regarding recovery allowed f or d imin ution in value of a dama g e d vehicle in a third - party claim. MIN NESOTA P olicy required insu re r to compensate insured for the loss of value (depreciation) not fully compensated for by repair. Cires i v. Glob e & Rutgers Fire Ins. Co. , 244 N.W. 688 (Mi nn. 1932 ). No court decisions re g a rding recovery allowed for diminution in value of a damaged vehic le in a third - party claim. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 14 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY MISSISSIPPI Mississippi courts hav e held that if, despite repairs, there rema i ns a los s in actual market value, that deficiency i s a d ded to the cost of the repai r s ; and that the measure of loss to an a uto dama ged , but not destro ye d by a collision , is the difference between its reasonable m a rket value immediately prior to the c ollis i on and i ts reasonable market value after all reason abl e and feasible repairs have b e e n made. Potomac Ins. Co. v. Wilkinson , 57 So.2 d 158 (Miss. 1952); C alver t Fire Ins. Co. v. Newman, 124 So.2d 686 (Miss. 1960). C ost of rep air of damaged vehicle may be re c overed i n third - party claim , as well as remaining d imi n utio n in pre - tort value afte r proposed repairs, but in no event, may cost of repair be recovere d to ex tent it exceeds total diminution in pre - tort value, in c ase of one holding personalty for sal e rat h er than for personal use . Ishee v. Dukes Ford Co. , 380 So.2 d 760 (Miss. 1980) . Reco v e ry for residual diminution in value al lowed, b ut doubtful that an o wner ’ s testimony could constitute sufficient proof. Thomas v . Global Bo at Builders & Repairmen, In c., 4 8 2 So.2d 1112 (Miss. 1986). But see , Regency Nissan, In c . v. Jenkins , 678 So.2d 95 ( M i ss. 1995), as modified on reh ’ g (Aug. 22, 1996 ) (suggesting that ow ner s hould be able to testify to property value). MISSOURI If policy language is unambiguous reg ardin g no cove rage for diminution, the diminished value i s n o t a covered loss and the ins u r er’s liability was capped at either th e actual cash value of the au to or the cost to repair or replace the damaged auto itself o r with par ts or property of like kind and q uality. Lupo v. Shelter Mut. Ins. Co. , 70 S.W.3d 16 (M o . Ap p. 2002). However, the M i s souri Court of Appeals has held that “ If the i nsurer, permitted t o under take repairs, falls short of substantial restoration of function, appearance and value, the i nsure d , upon p roper showing, can recover damages in an am oun t equ al to the difference bet w e en the reasonable market value of the insured automobile immediat el y pri or to the upset and its reasonable market value when te n dered to p laintiff after repairs.” Wi lliam s v. Farm Bureau Mut. Ins. Co. of Mo. , 299 S.W.2d 58 7 ( M o. C t. App. 1957). Although p r oper measure of damages in an automobi le colli sion case is genera ll y the difference between the market value of automobile befo r e collisio n and its value after colli sion, that is not the only measure of damages allowable; als o all owable are the cost of r e p airs and the difference between the ma rket val ue of the car befor e the c ollision and its value after the repairs. Rook v. John F . Oliver T rucking Co. , 556 S.W.2d 200 (Mo. App. 197 7) ; Hood v. M. F. A. Mutual Insurance Co. , 379 S.W. 2d 806 (Mo. App. 1964); L a ngdon v. Koch , 393 S.W.2d 66 (Mo. App. 1965) . There may be other i tems of loss, such as cost of preservation and diminution of damage and loss of use, which would b e add e d to the total damage suffered by the owner. and th e a m ount , if any, of the deterio r a tion of the repaired car, being the di fference in the reasonable ma rket value of the car immediately before the accident and th e reasonabl e market value of the same after it had b een repaired. Gilwee v. Pabst Brewing Co. , 193 S.W. 886 ( Mo. App. 1917). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 15 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY M O N TANA Where the policy limit s the insur ance com pany ’ s liability to t he ac tual cost of replacement of the property damaged or des t royed, “ r e placement ” means the restor ation of the p roperty to its condition prior to the injur y. S uch restoration may or may n o t be accomplished by repair or replacem ent of b roken or damaged pa rt s. Th ere is not a c omplete restoration of the property unles s there has been no diminution in valu e aft e r repair of the car. Courts have differed in their con s truc tion of similar limitati o n clauses and will probably continue to do so, so long as policies a re co uched in language tending toward uncertainty and confus i on. Eby v. Foremost Ins. Co. , 374 P.2 d 857 (Mont. 1 962). No court decisions regarding recover y d i rect ly allow recovery of dim i n ution in value of a damaged vehicle in a third - party claim. In Ho p v. Sa feco Ins. Co. of Illinois , 261 P.3d 981 (Mont. 2011), t h e Supreme Court intimated that the av ailab i lity of third - party recovery of inherent diminution in valu e damages is still an op e n question in Montana, finding in that particul ar ca se, that the d im inuti on in value claim was not ripe for adjudication because the Suprem e Court had not yet address ed th e questio n of whether insurers in Montana have an ob lig a tion to pay residual diminis h e d value claims. NEBRASKA Where dama ge to ve hicle can, at a rea so nable cost, be repaired and the property restored to substan t ially its condition immediately befor e dam a ge occur red, and cost of repair does not exceed dif fer e nce in market value of the p r o perty before and after injury, then me asure of damages is reasona bl e cos t of repair plus r easonable value of loss of use of the property f or the reasonable amount of time required to complete repair. Loss of market value i s o n ly r ecoverable when vehicle i s not repaired. Chlopek v. Schmall , 396 N.W.2d 103 (Neb. 1986) . No c ourt decisions regardin g recovery allowed for diminution in v alue of a damaged vehicle in a third - party claim. NEVADA Currently no applicable Nevada court de c isio ns can be found regardin g recovery allowed for diminution in val ue in a first - party claim. Ho wever , Nevada statutory law provides that when an insurer el e cts to rep air a vehicle, the only req uirem e nt is th at the insurer restores the damaged vehicle to its condition before the los s . No mention is made of payment for res idual di minished value. Nev . Admin . Code § 686A.680. No court decisions regarding recover y allowed f or diminution in value of a dama g ed vehic le in a third - party claim. NEW HAMPSHIRE C urr e ntly no applicable New Hamps h i re court decisions can be found regard ing reco very allowed for di mi nutio n in value in a fi rst - party claim. No court decisions r e garding re covery allowed for diminuti on in value of a damaged vehicle in a third - party claim. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 16 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY NE W JER SEY Depends on policy la n g uage. Early case law says that actual cash val ue of an auto loss is esta blished as fair ma rket value and have applied principle s holding t hat when the cost to repair a ve h icle is proven, but there exists additional proof s how i ng t hat even with the repair , the vehicle has depreciated, the plain tiff is entitled to the rea so nable cost of repair pl us the depreciation, if any. Fanfaril l o v. East End Motor Co., 411 A.2d 116 7 (N. J . App. 1 980) . Where policy unambiguously excludes c ove r age for diminution of value t h e insurer ’ s liability is capped at the cost of returning the dama ge d veh icle to substantia lly the same physical, operating, and mechanical condition as existed immed iatel y before the loss. Insurer’s obligation does not inc lud e lia bility for any inherent d i minished value caused by conditions or defects that are not subje ct to r epair or replaceme nt, such as a stigma on resale result i ng from “m arket psychology” that a ve hicle that has been damaged and repaired is worth less th an a sim ilar one that has never b e en damaged. Kieffer v. High Point Ins. Co. , 25 A.3d 1206 (N.J. Su pe r. Ap p. 2011). Measure of damages, when auto i s damaged , i s t he differe nce between the reasonable marke t value o f auto before and after the tortious injury an d the cost of repair and the d e preciated value of vehicle because of having b een in an accident, i s the appropriate measu re of damages , so long as total does n ot exceed the diminution in market va lue a n d does n ot exceed the pre - accident market value of the vehi cle. Fanfarillo v. E. En d Motor Co. , 411 A.2d 1167 ( N.J. Super. 1980) . I n Fanfarillo, the v al ue be fore the theft was $7,900 and after the theft $5,000, a difference of $2,900. There was also evide n ce that the vehicle as repaired was worth only $7,5 00, so t hat the jury could have f o und total damages to the vehicle of $2 ,313 ($1 ,913 for the cost o f repai r and $400 depreci ated value). NEW MEXICO The New Mexi c o Court of Appeals has followed the m ajori t y trend toward disallowing recovery for the diminis hed mark et value under the terms o f plaintiff ’ s policy of insurance. Dav is v. Fa rmers Ins. Co. of A ri z., 1 42 P.3d 17 (N.M. A pp. 2006). New Mexico has held that “ d amage awar ds should provide full and just c ompensat ion for the injured party”, and that such c omp e nsat ion is tantamount to the c oncept of making the injured person wh ole. It has also been state d that the proper measure of damages for personal property dam a ge will be wh ich ever is less - repair cost s plus de preciation or reduction in market value. Hu bba r d v. Albuquerque Truck Ctr. L t d. , 125 N.M. 153 (1998). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 17 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY NEW YORK In Edwards v. Maryland Motor Ca r Ins . Co., 197 N.Y.S. 460 (N.Y. App. Div. 1922), the court h eld that d iminution in value is damag e emb r aced wit hin the clause of the policy insuring the p lai n tiff against direct loss or d a mage by the peril of theft. The policy contain ed language that th e insur ance company had t he option to “repair, rebuild, or rep l ace the pr operty lost or damaged with othe r of like kind and quality.” The court found that “d imi n utio n in value is damage emb r a ced within the clause of the policy in suring p laintiff ‘against d ir ect l oss or damage’ by the perils of ‘theft, robbery or pilf e rage.’” Th e court went on to state th at th e liabili ty is not severed by making the insurance c omp a ny l iable for actual cost of r epairs or replacement. The court notes that th is case allowed rec ov ery f or diminished valu e by finding coverage in another sect i on of the insurance policy and not du e to a ny oblig ation to repair the auto with like kind and qu a lity . In Miller v. Sanchez , 6 Misc.3d 479, 789 N .Y.S.2d 850 (N.Y. City Civ. Ct. 2004), the cour t accepted the difference in value as the proper measure of to r t damages. If the auto is of the type that apprecia tes in value, such as with rare automobiles , o r is otherwise unique or bran d new, third - party d iminution of value damages for a motor vehicle a r e recoverable in addition to the cost of repairs even if the repairs restore the ve hicle to its pr e - acc i dent con dition. Cost of repairs and residual diminution in value are the proper measure of damages . It is not the diminution in value based on the value of the car before the accident and immediately after the accident . Franklin Corp. v. Prahler , 932 N.Y. S .2 d 610 (N.Y. App. 2011) ; Rosen f i eld v. Choberka , 5 29 N.Y.S.2d 455 (N.Y. 1988) (vehicle “a few wee k s ” old); Parkoff v. Stavsky , 2013 WL 4528799 (N.Y. App. 2013) ( Mercedes - Benz with on ly 398 miles ); Johnson v. Scholz, 93 N.Y.S. (N.Y. Sup. 2011) (collector automobile) . See also Jacobson v. Purdue , 2018 N.Y. Slip Op. 52001 (N.Y. Sup. 2018) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 18 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY NORTH CAROLIN A North Carolina cou rts have essentially found that the measure of d a mages is the fa ir market value of the car immediately before the collision and the fai r market val ue af t er the a ccident: “where the insurer elects to repai r t h e da maged automobile and rep r e sents, at least ta citly, that it will place the vehicle in the co n d ition that it w as in previously, the insured has no choice b u t to acquiesce, and th e o riginal cont ract o f the pa rties is converted into a new one, under wh ich the insurer is bound to repa i r the automobile an d restore it to its former condition.” Pierce v . American Fideli ty Fire Ins. Co. , 83 S.E.2d 493 (N.C. 1954). North Carolina uses a var iety of meth ods t o determi ne diminished value, including the ClaimCoa ch. c om s ystem and the Classic Ca r Appraisal Service (Don Peterson) methodology, in addition the 17( c ) formula mentio ned in the introduction to this chart . North C arolina has actually p ass ed a statute whic h outline s the procedure for a policyholder to have a f i rst - party diminished value c l a im. N.C. Gen. Stat . Ann. § 20 - 279.21(d)(1) provides that, if an i n s urer ’ s and poli cyholder ’ s estimate of diminished value diffe r s by more than $2,000 or 25% of the v ehicl e ’ s fair market retail value, then each party select s a n ind ependent appraiser to ap p r aise the loss. If they cannot agree on a number, then a third - par t y umpire is call ed to determine the diminished value, whose r e port is binding on the pa rties. Thoug h tim e - consumi ng, this method avoids criticism of the 17( c) f ormu la and keeps parties out o f court. T he measu re of damage for injury to personal property is t he difference b etween the market value of the property immed i ately before the injur y a nd the marke t val u e immedi ately after the injury. DeLaney v. Henderso n - G i lmer Co. , 135 S.E. 791 (N.C. 1 926). Evidence of the reasonable value of repairs to a damaged ve h i cle , and the re asonable market value of the vehicle as repai r ed , are admissible to sho w the differ ence i n its va lue before and af ter it was injured . U. S. Fid . & G uar. Co. v. P. & F. Moto r Express , 18 S.E.2d 116 (1942) . North Carolina Jury Pattern Instru c t ions provide th at, “The plaintiff’s actual property damages a re equal to the differ enc e between t h e fai r market value of the property immediately before it wa s dam aged and its fair market v alue immediately a fter it was damaged. ” If evidence of repair is i n troduced : “ Evid ence of [estimates of the cost to repair] (an d ) [the actual cost of rep airing] the damag e to the plaintiff’s property may be considered by y ou i n de termining the difference i n fair market valu e immediately before and immediately after the d a mage occurred .” Property Damages -- Diminution in Market Value . , N . C . Pattern Jury In st. - Motor Veh . § 1 0 6.62 . 11 N.C. Admin. Code 4.0421 (5) also discusses cla i ms h andling and claims settl e m ent practices whic h constitute unfair claim settlement practices a n d provides as f ollows: (5) If a release or full payment of c l aim is executed by a t hir d - party clai mant, involvin g a repair to a motor vehicle, it shall not ba r the right of the third - part y claimant to prompt ly assert a claim for diminished value, which d i m inished value w as directly caused by the accident and which d iminished value could not be determin ed or known un til after the repair or attempted repair of th e mot or vehicle. Claims asser t e d within 30 days a fter repair for diminished value shall be consi d e red promptly as serted. MWL takes the position that , regardle s s of the insurance cod e, the Statu t e of Li m itations for property damage is three (3) years. As of the publication of this char t , there have been n o cases on point wherein the court has reduced t h e three (3) yea r statute based on the (conflicting) insuranc e code. However, to be saf e, the claim shou l d be mad e immediately so as to ensure a timely resp ons e . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 19 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY N ORTH DAKOTA No court dec i s ions regarding rec overy allowed for diminution in value of a dama g e d vehicle in a first - party claim. Section 32 - 03 - 09.1 states: “ The measure of damage s f or injury to prop e rty caus ed by the breach of an obligation not arisi ng f rom contract is presumed to b e the reasonable co st of repairs necessary to restore the property t o the condition it was in immediately before the injury was i nflicted and the reaso nab le value of the l o ss of us e pending restoration of the property, unle ss r esto ration of the property w i t hin a reasonable p eriod of time is impossible or impracticable, i n which case the measure of damages is presumed to be the diff e rence between the mark et value of the prop e rty imme diately before and immediately after the in jur y and the reasonable value of t he loss of use pen ding replacement of the property.” Sullivan v. P u lkrabek, 611 N. W.2d 162 (N.D. 2000). OHIO Ohio case law has held in particular cas es that the ins ured w as not a llowed to recover diminution in value of a dam a ged auto under the particula r policy, and that t hat there was no cause of action for diminished v alue of an auto . Nationwide Mut. Ins. Co. v. Shah , 2004 Ohio 1291 (Ohio App. Dist. 5, 2004); Kent v. Ci n cinnati Ins. Co. , No. CA2001 - 04 - 100 (Ohio App. Dist . 1 2 , 20 01). When a plaintiff pr o v es that the value of his auto after repair is less than the pre - i n j ury value of th e auto, the plaintiff or subrogated carrier m a y also recover the res idu al diminutio n in v alue in addition to the cost of repair, provided th at t he p laintiff may not recover d amages in excess o f the difference between the market value of th e auto immediatel y before and after the injury . State Farm Mut u al Auto . Ins. Co. v. C hee ks, 2014 WL 47087 4 (Ohio A pp. 2014 ) ; Rakich v. Anthem Blue Cross and Blu e Shi eld, 875 N.E.2d 993 (Ohi o App. 2007). OKLAH OMA Oklahoma has held that “ unless the collisio n resulted in a t otal loss of the automobile plaintiff’s measu r e of recovery was the dif ference betw een t h e fair m arket value of his automobile in the condit ion in w hich it was immediately p r ior to the collisi on, and its value thereafter. If the collision r e sulted in a tot al loss of the auto his measure of recovery w a s the fair market valu e t hereof in th e con d ition in which it was immediately before the collis ion . ” Ph oenix Ins. Co., Hartford , Conn. v. Diffie , 2 70 P.2d 634 ( Okla. 1954). Oklahoma statute prov i d es , “ For the br each of an obligation not arising from contra c t, the measure of dama ges , except whe re ot h erwise e xpressly provided by this chapter, is the a mou n t wh ich will compensate for a l l detriment proxim ately caused thereby, whether it could have bee n anticipated or not. ” Okla. Stat. Ann. tit. 23, § 61. In case s where it is shown tha t r epairs faile d to b ring dam aged item of personal property up to the co ndi t ion it was in prior to the d a m age, the cost of r epairs made plus post - repair diminution in valu e of the property will ordinarily be the proper measure of dam a ges. Brennen v. Aston , 84 P.3d 99 (Ok la. 2 0 03). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 20 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY O REGON The Oregon Supreme Court has stated t hat the insured was entitled to t h e difference betwe en the pre - loss and post - loss value of the vehi c l e and the prope r repair of the auto may not accomplish this r esult, and that a comp let e restoratio n of t he prope rty has not occurred unless there has been no d imin ution in value after rep a i r of the auto. Dun mire Motor Co. v. Oregon Mut. Fire Ins. Co. , 11 4 P.2d 1005 (Or. 1941). In a more modern case, th e clash was o v er the meaning of “rep air ” in an insu rance contract . I nsured argued that to “ repair ” a vehicle , t h e in surer must restore the t r u ck to a pre - accident condition, and if that ’ s not possible, then i n surer must pay for the associated diminution in the vehicle’ s value. The insurer ar gue d that “ repa ir ” m e ans a re storation of the function and appearance of th e ins ured property. The O rego n Supreme Court found that “repair” in an auto insurance policy req u i res the insurer to restore the insured to a pre - loss conditi o n via payment of money , r epair of veh icle, or repla cement of ve hicle . If insurer is unable to rep a ir t he vehicle to a pre - loss c ondition, the resulting diminution of value is a loss to the insu r e d which was cau sed by a collision, for which the insurer was payable under the insu ran ce policy. G onzal e s v. Far mers Ins . Co . of Oregon , 196 P.3d 1 (Or. 20 08) . C ou rt of Appeals of Oregon a c knowledged potential acceptance of evidence of diminished value b u t found that suc h evidence was not presented. EAM Advertising Agency v. Helies , 954 P.2 d 8 12 ( Or. A pp. 1 9 98). PE NNSYLVANIA T he Supreme Court specifically n ote d tha t, with regard to remedi a l damage to realty, a plaintiff may recover only the cost of repai r or restoration without regard to diminution i n value of the p roperty and a lso state d i n a separate case that it was unaware of any circumstances where an i nsu r ance company reimbursed the i n sured for diminished value. The Court held that such payment woul d not be the norm and could not form the basis for a reasonabl e expectation by the pu bli c. Lobozzo v . Ada m Eidemil ler, Inc ., 2 63 A.2d 432 (Pa. 1970) ; Munoz v . A l lsta te Ins. Co., No. 9906 - 28 5 5 (Pa. Comm. Pl. 1999). When the vehicle is not a total loss, the p l aintiff may rec over (a) the difference betwee n the market va l ue of the vehicle befo re the harm and the v alue aft er the harm, or, at the plaintiff ’ s electio n, t he r easonable cost of repair o r restoration where feasible, with due allowance for any differen c e between the or iginal value and the value aft er repairs, and (b) the loss of use . H olt v. Pariser , 54 A . 2d 89, 9 1 ( Pa. Super . 1947) ; Horton v. Philadelphia Ra p id T ransit Co., 94 Pa. Super . 553, 555 - 56 ( Pa. 1928) ; Bauer v. Armour & Co., 84 Pa. Super. 174 ( P a. 1924) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 21 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY RHOD E ISLAND A Rhode Island Superi or Court denied an insurer’s summary j udg men t as to d iminu t ion in v alue in a ca se addressing policy language, fin d ing that an ambiguity existe d as to whether “the cost of repair or replace the property with ot h e r of like kind and quality” includes damages for the inheren t diminished value of a n a uto resultin g fro m the veh icle being i n an accident. The Court held w her e a d ispute existed with resp e c t to the parties’ intent, there existed a genuine issue of materi a l fact that must be resolved by the jury. Caza bat v. Metropol i tan Property & Casualt y I ns. Co., 200 0 WL 1 910089 ( R.I. Super. Ct. 2000). No court decisions r ega r ding recovery allowed for di m i nution in value of a damaged vehicle in a third - party claim. SOU T H CAROLINA W here the policy language clearly “ expressly limit s coverage to the lesse r o f t he actual valu e or the cost of repa ir” the South Carolina Supreme Cou r t ha s held that “[t]hese are a lternatives, which do not include an additional obligation to pay f or diminished v alue when the cost of repair i s chosen.” The C ourt also would not re ad int o the cos t of r epair an additional requirement to also pay for dim ini s hed value since, to do so, w o u ld render the limitation provision meaningless. Schulmeyer v. Sta t e Farm Fire & Ca s . Co., 579 S.E.2d 132 (S.C. 2 003). South Car o lina has held that “ th e c ost of the r epair s made… p lus the (rem aining) diminution in value of the prop erty will ordinarily be t h e proper measure of damages.” Newman v. Brown , 228 S.C. 472, 477, 9 0 S.E.2d 649, 6 52 (1955). SOUTH DAKOTA The S outh Dakota Sup r eme Court followed the ma jor ity rule and r e fused to allow recov ery of diminished value after t he f ull repair of a vehicle and a p plied the clear language of the insurance policy. Culhane v. West e r n Nat’l Mut. In s. Co ., 704 N.W.2d 287 (S.D. 2 005). No court d ecisions regarding rec ove ry allowed f or di m inution in value of a damaged vehicle in a third - pa rty clai m. TENNESSEE The Tennes s e e Court of Appeals refused to apply diminution in value in Tennes s e e auto policies finding the wording unambiguo us and limiting the insured to repairs . B lac k v. Stat e Far m Mut. Au to. Ins. Co. , 101 S.W.3d 427 (Tenn. App. 20 02) ; Sen ter v. Tennessee Farmers M ut. Ins. Co ., 702 S.W.2d 175 (Tenn. App. 1985) . The measure of th i r d - party damages is either repair costs or the difference in m arket value immediatel y b efo re and af ter t h e accide nt. It is no t both. There is no definitive cas e law indicating that a diminution in value m easured after the repair is a recognized element of allowable damage s in Tennessee . GEICO v. Blo o dworth , 2007 WL 1966022 (Tenn. App. 2007) . Althou gh Bloodwo r th did n ot specifically pronounce that post - repair dim i nution in value claims are viable in Tennessee (it was a class action suit and the issue had to do with cert ific ation as such), it did say that in in ord er t o prove residual diminutio n in value, the o w ner has to prove (1) the vehicle ’ s pre - accident condit i on and value (taking into consideration, e.g., other damage to the vehicle); (2) the vehicle ’ s post - accident val ue; and (3) proof that the repair did not res tore the vehicle to substa ntially the same v alue it had before the accident. Government Employees I ns. Co. v. Bloodworth , 2007 WL 1966022 (Tenn. App. 2007) . WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 22 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY T EXAS Texas courts have refused to a llo w reco very of d iminution in value and hav e stated that “ [w] here an insur er has f ully, completely, and a d e q uatel y ‘repaired or replaced the property with othe r of like kind a nd quality’ any reduction in market value of the vehicle due to factors that are no t subj ect to r e pair or replacement cannot be deemed a c ompo nent part of the cost of r epair or replacem e n t . ” Ame rican Manufacturers Mut. Ins. Co. v. Schaefe r , 124 S.W.3d 154 (Tex. 2003). The Texas Department of Insuranc e Bulletin B - 0027 - 00 (2000) has als o h eld: “ The posi t ion of the Department is t hat an insurer is not obligated to pay a fir st party claimant f o r dimi nished value when an automobile is completely r epaired to its pre - damage condition. The language of the ins urance policy does not require paym ent for, or refer to, diminished value.” A v ehicle ’ s dimin utio n in market v alue due to a dditional mileage a n d the marketplace perception that a fully repaired v e hicle was infe r ior was not part of the insurer ’ s obligation to repair the vehicle after a theft un der th e policy . Because the vehicle was f ully repaired, the insurer was not requ ired to pay its inhere n t d imini shed value, i.e., the difference between the v a lue before the loss and after repair. Where an insurer has f ully, completely, and adequately re pai red or replace d the property with other o f like kind an d qu ality, any re duction in ma rket value of the v e h icle due to factors that are not subject to “repair or replacement ” cannot be deemed a component part of the cos t of repair or replacement. Carlton v. Trini ty Unive r sal Ins. Co. , 32 S.W.3d 45 4 (Tex. App. 2 000) . No court de cisions speci fically allowing f o r recov ery diminution in value of damaged vehicle in a third - party cl aim in addition to cost of repair to damaged vehicle. In action for damag e to a vehicle , owner or subrogated i nsurer may sue for either di min u tion of market value or co st of r epair to d a m a g ed ve hicle. Jones v. Wallingsford , 921 S.W.2d 46 3 ( T ex. App. 1996) (Note this case concer ns Immediate Diminished Value rather t han In herent Diminis hed Value . ) A pla i nti ff whose property has not been destro ye d may recover either (1 ) mar ket value measure d b y diff erence in immediate pre - in jury value of proper t y and immediate post - injury value before repairs, or (2) cost - of - repair and loss - of - use damages , including lost p rofits, but recove ry of both remedies co nsti tutes a double recove ry. T exas Farm Bureau M u t . Ins. Co. v. Wilde , 385 S.W.3d 733 (Tex. App. 2012) abrogated on ot her grounds by J & D Towing, LLC v. Am. Al ternative Ins. Corp. , 478 S.W.3d 64 9 ( Tex. 2016) . Howe v er, there are case s allowing for recover y of diminution in value in ot her settings. Roy c e H omes, L.P. v. Humph rey , 244 S.W.3d 570 (Tex. App., 2 008) (water d am age to new home under construction) , Ludt v. McCollum , 762 S.W.2d 575 (Tex. 1 988 ); Terminix Int ’ l , Inc. v. L ucci , 67 0 S.W.2d 657 (Tex. App . 19 84) (case involved pe rmane nt reduction to h o m e due t o foundation p roblems. Court held that an awar d of diminishe d value is recoverable in addition to costs of repair, assuming the permanent r edu ction in value re f ers to tha t reduct ion occurring even aft er r epairs are made ). In Texas , residual damage s t o mark et value of re al estate are referred to as “st i gma damages.” H ouston Unlimited, Inc. Metal Process ing v. Mel Acres Ranch , 443 S.W.3d 820 (T ex. 2014) ; s ee also , Ludt v. Mc Collum , 762 S.W.2d 575 (Tex. 1 988) . Texas law is clear that no double recover i e s are a llow ed . Under certain circumstances, a plainti f f m ay recover f or both diminution in valu e and cost of repairs , if there is no dou ble recovery. Diminution in va l ue does not duplicate cost of repairs if the diminution is based on a comparison of ori g i n a l val ue of property and value after rep airs are mad e . Parkway Co. v . Woodruff , 901 S.W.2d 434, 441 (Tex. 1995). Note: Texas Department of Insurance B ulletin B - 0027 - 0 0 states — without p roviding any authority or precedent — that “ An in surer also may be o bli g a t e d to pay a third - party claimant for any loss of mar k et value of the claimant’ s auto mobile, regardless of the completen ess of the repair, in a liabi li ty claim that t h e third party clai mant may have against a po licyholder . ” It does n ’ t ap ply to vehi cle th a t i s a t otal loss. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 23 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY UTAH No court dec isions regarding recovery allowe d for diminu tion in value of a damaged vehicle in a first - party claim. In an a ct ion fo r damages t o an auto, plai ntiff, being entitled to r ecov er the difference in the m arket valu e of hi s a u to im mediately before and after the injury, can rec o ver not only th e reas onable cost of repairs, but also any depr eciation in market value after re pairs were comple t ed. Metcalf v. Mellen , 192 P. 676 ( Utah 1920 ) . VERMONT Absent sp ecifi c policy l anguage i n a cla im made by an insured to the c ontrary, a polic y must pay for d iminis hed va lue. When evaluating such diminishe d value claims, insurers must t ak e into account al l relevant info rmation which would includ e, b ut not be limited to, all relevant i nformat i o n provi ded by an insured or third - par ty claimant rega r ding a claim fo r dimi nution in value. While the Department has not mandated a particular meth od for a djusting su c h claims, insu rers must be able to artic ulat e a fair and equitabl e pro cess and s tandard s f o r suc h an adjustment . VT Bulletin 1 64 (8 - 10 - 11). Th e usual measure of dam ages i n cases involving property damage t o an auto is the difference bet we en mar ket value o f auto immediat ely before accident and it s ma rket value immediatel y aft erwards. I n deter m i n i ng th e difference between value of auto before and a fter accident, or its depre ciation as result of injury, eviden ce is admissible as to the reas on able c ost of repa i rs made necess ary thereby, and as to the val ue of automobile as r epair ed. Kinney v. Clo u t i e r , 21 1 A.2d 246 (Vt. 1965). Measure of damages for d amage to a vehi cle is fair market value before the injury less fair market value after the in ju ry. We lls v. Vill . of Orleans, I nc. , 315 A.2d 463 (Vt. 197 4). No other court decisi ons r egarding r ecovery a l l owed for diminution in value of a d amaged vehicle i n a third - party claim . VIRG INIA The Virginia Supreme Court has refused to compensate an insur ed for t he loss of h is new car war ranty where the policy did not make such an agreeme nt an d the dimi nution i n v alue 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 de stroye d and it is reasonably sus ceptible of repairs, the m easu re of damages is the cost of repairs and an y d i minut ion of the auto’s market value which results f r om the car havi ng bee n inju red after the repairs; that is, the cost of repairs plus any amoun t of dep reciation i n value of the vehicle as repaired. Avere tt v . Shircliff , 237 S.E. 2d 92 (Va. 1977 ). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 24 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY WAS H I N G TON I n Moeller v. Farmers Ins. Co. of Washington , 2 6 7 P.3d 998 (Was h. 201 1), th e court decided a case of first imp ression holding that an auto po li cy pro vide d first - party coverage for diminished value foll owin g post - accident repai rs. I n other wo rds, to r e p air a vehicle s o that it is in subs tantially the sa m e functional co nditio n it w as pre - accident, or if instead the policy requires Farmers to repa ir a veh icle so tha t it has the sa me value it had pre - accide nt. The policy in this ca se sa id liabili ty for l o s s cann ot exceed “[t]he amount which it would cost to repair or repla ce dam aged [ ...] property with other of like ki nd and quality, or with new pro pe rty le ss an adjus t ment for physi cal deterioration and/or d epre ciation.” Farmers arg ued t hat “ dimin ished v a l u e ” los s wa s excluded by its limits o f liability and p ayment of loss provis ions a nd that a car is either a total los s, or it is repairable , and tha t an ins urer meets i ts obligation to repair when it returns the vehicle to a good and usea ble condit ion. Th e c o urt r uled that because the average consumer would r e ad a “repair or repla ce” po licy to provide coverage of equal v alue when a car is repaired, re pl aced, or “totaled , ” the coverage provision encompasses dim inis hed value loss, and t he li mits of li ability a n d paym ent of loss provisions do not unambiguously ex c lude it . Washin gton P ractic e Series, Pattern Jury Charges stat es that the measure of dam a ges to perso n al propert y is: The lesse r of the following: (1) Th e re asonable value of nec essar y repairs to any p r o p erty that was damaged; or (2) The d ifference betwee n the fair cash market value of the property immediately before the occurrence and the fair ca sh marke t value of t he unrepaired property immediately after the occurrence. 6 Wash. Prac. , Wash. Pa ttern J u r y Instr . Civ. WPI 30.11 (6 th ed.). No other court dec i sions, statutes , admi nistra tive regulations or other authority regarding allowing or disallow in g clai ms for dimi n ution in value of a damaged vehicle in a thi rd - party claim. WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 25 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY WEST VIRG INIA An in formati o n a l lett er from the West Virginia Offi ces of the Insur a nce Commissione r date d Nove mber 2001, withdrew a previous info rmation letter dated August 200 1, which outlined p o licy exclusion s for diminished value, fi rst - party or third - party. West Virginia Informa t i o n al Le tter No. 137 (Aug. 2001). This informational l e tter was origin ally w ritten in response to Ellis v. King , 400 S.E.2d 235 (W.V. App. 1990) . Ho we ver, a ccording to a 2/2/15 telep hone conversation with Vic tor Mullins, Associate Co unsel with the West Vi r g i n ia In surance Commissioner’s Office, the August 2001 informational l etter went a little too far, suggesting the Ell is holding extended to first - pa rt y clai ms, when th i s is not the c ase. It would appear that ther e currently is no aut horit y authoriz ing fir s t - p arty claims for diminution in value under auto poli c ies. No court decisi ons re garding recovery allowed for diminu tion in value of a damaged vehi cl e in a third - part y claim. The We st Virginia Supreme Court, sta ted that “ [i]f the ve hicle looked an d opera t e d subst antially the same after the ac cident but its m a rket value had been d iminis hed by the fact of being in an acci dent, then to be adequately com pe nsated , the injur e d party must r eceive, in addition to the cos t of repairs, the dim inuti on in mark et valu e s t emmin g from the injury”, but this s hould be narrowl y construed with proof of th e diminished value, structural dama ge to the vehicle, and only for a vehic le with “si g nificant value ” prior to the accident. The Supreme Court created an ex ception to the ge n eral rule permitting only cost of repai r or diminution in value for motor vehicles which were structurally damaged and continued to suffer a residual loss of value eve n after they were repaired . E llis v. King, 400 S.E.2d 235 ( W. Va. 199 0) . If the owner of a vehicle which is damaged a nd subsequently repaired can show a diminution in value based upon structural damage after repair, then recovery is permitted for that dimi nution in addition to the cost of repair, but the total shall not excee d the market valu e of the vehicle before it wa s damaged. Brooks v. City of Huntington , 768 S.E.2d 97, (W.Va. 2014) . WI SC O N SIN I nsurance policy limits of liab ility provision p ermitted i nsure r to c hoose to repair vehicle, even if all poss ible repairs would not restore ve hic l e to its pre - c ollision marke t value. Insurer is not re quir ed to pay for diminis hed value follo wing ad eq u a te re pairs. Wildin v. Am. Family Mu t. Ins. Co. , 638 N.W.2d 87 (Wis. App. 2001). On November 29, 2001 — the day after the seminal Georgi a decision in Sta t e Farm Mut. Au to. In s. Co. v. Mabry , 556 S.E.2d 114 (G a. 2 001) — the Wisconsin Co urt of Appeals decided W i s con si n’s own first - party diminution in value case. I n Wildin , t he c ourt affirmed a trial court’s grant of the insurer’s motion to dis miss the insur ed’ s complaint aga inst the insurer for failure to pay resi du al dimin ished value in addition to repair cos ts . The i n sured argued that despite the repairs, no rep a ir could h ave r estored the vehicle to pre - loss condition because of unibody struc ture and/or fr ame damage. The co urt disagr eed with the insured, holding th at the policy language only required the carr ie r to pa y for all ne cessary “repairs” and “repair,” gi v en its ord inari ly understood meaning, and t his did not mean the carrier had to re store t he vehi cle to its pre - los s value . Plaintiffs may be “entitled to eit her the reasonable co st of repa irs or t he d im i n ution in fair mark et value of the vehicle, whicheve r is less.” Howe ver, an owner is entitled to cost - of - repair damages and loss - of - va lue - after - repa ir d amages if the own er pro ves that the repairs to the veh icle did not restore the vehicle to its pre - inj ur y 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). WORK PRODUCT OF MATTHIESEN, WI C KERT & LEHRER, S.C. Page 26 Last Updated 4/28/20 STATE FIRST - PARTY THIRD - PARTY WY OM ING In a const ruc t ion defect cla im, the Wy oming Supreme Court has found that diminution in value was an elem ent of d ama ge i n an i nverse condem nation case. Miller v. Campbell C ounty , 901 P.2d 1107 (Wyo. 1995). No court decisions regarding recovery allowed f or diminution in v alue of a dama ged vehicl e in a third - party claim. 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