Category Legal Affairs

Motor collision claimants can recover diminished value of repaired vehicles

24 October 2021 Penny Biram, Norton Rose Fulbright

The Massachusetts highest court found that an insurer is obliged to compensate the claimants not only for repairs to their vehicles to restore them to pre-collision condition but also for what is known as inherent diminished value (IDV). IDV damages are included as part of the amounts to which a claimant is legally entitled to collect for property damage. The general rule for measuring property damage is diminution in market value and includes intangible damage such as diminution in value. The claimant must be made whole and compensated for what has been lost.

This does not suggest that every vehicle that is involved in a collision and is subsequently repaired has suffered IDV.  Individual proof is required to demonstrate that a given automobile has sustained some form of diminution in value due to a collision even after repairs are made.  The plaintiff must establish (i) that the vehicle has suffered IDV damages and (ii) the amount of the IDV damages.

The position is the same in the South African law of damages and, equally, in insurance law depending on the policy wording.

[McGilloway and Others v Safety Insurance Co case number SJC-13053 Supreme Judicial Court for the Commonwealth of Massachusetts]

First published by: Financial Institutions Legal Snapshot

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