Diminution of Value

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When a car is damaged in an accident, then repaired, the resale value may be less than that for a comparable car that has not been damaged. In other words, the damage results in a reduction—or “diminution”—in the resale value of the auto. 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, or it may arise from a first party claim against the insured’s own physical damage coverage.

With regard to first party claims, while it is perhaps arguable, the ISO contract language—specifically the Limit of Liability condition—appears to cover only the actual cash value (ACV) of the damage or the actual cost to repair the damage. There is nothing in the policy wording that even appears to contractually cover any reduction in market value, even if the insured is able to prove the amount of reduction in value.