The Oregon Supreme Court backed up an earlier court decision that stated an automobile insurance policyholder had the right to receive compensation for the diminished value of his collision-damaged vehicle after it had been repaired.
The plaintiff asserted that the repairs made to his collision-damaged vehicle did not restore it to pre-accident condition.
The plaintiff’s insurance company, Farmers Insurance, asserted that it was only responsible for the cost of repairs and not for any diminished value. But the vehicle owner argued that the policy made Farmers liable for the entire “loss.” Also, that if the attempted repair could not restore the vehicle to pre-accident condition, then Farmers was responsible for the diminution of the value of the vehicle that was a result of the accident.
In the decision handed down on Oct. 23, the Supreme Court cited a previous case finding that if repairs to a vehicle do not restore the vehicle to pre-accident condition, then the correct measure of damages is “the difference between the fair cash value of the automobile before and after the collision.”
A similar decision was reached in Ohio in 2007 where the 10th District Court of Appeals in Columbus ruled that a policyholder could seek not only repair costs but also diminished value from his insurer, Nationwide.
Diminished value cases typically focus on the language of the policy and apply to policies that do not explicitly exclude payment for diminished value.
In the Oregon case, the Oregon Supreme Court pointed out that this ruling would not prevent insurers in the future from including a definition of repair in policies that excludes diminished value from coverage.
To read the court decision from the Oregon Judicial Department, click HERE.
