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A New Jersey appeals court has ruled that insurance customers have no right to compensation for the loss in value that occurs when their vehicles are wrecked in crashes and then repaired through insurance coverage.

The panel [in Kieffer v. High Point Ins. Co.] said the carriers "agreed to compensate plaintiffs maintaining collision insurance coverage for damage resulting from vehicular mishaps with the repair or replacement of the damaged vehicle or actual cash value of the vehicle at the time of the accident, but expressly excluded diminution in value."

Each of the policies promised to pay the cost to repair or replace the vehicle but excluded coverage for diminished value: the difference between the price one could have obtained for it before the accident and what one would get for it afterward, with all the damage from the accident repaired. –New Jersey Law Journal

The original suits were filed in 2008, when vehicle owners sought compensatory damages for their vehicles’ diminished value after an accident, suing High Point Insurance Co, First Trenton Indemnity Co., and NJ Manufacturers Insurance Co. for breach of contract under the Consumer Fraud Act. The plaintiffs also sought an order requiring the carriers to notify their customers about the existence of diminished value coverage, and to pay diminished value claims in the future.

These suits were denied because the insurance policies were clear and unambiguous about not offering coverage for diminished value. But perhaps the time has come for carriers to change the offer. It makes sense for standard auto insurance policies to include diminished value coverage. Consumers pay hundreds and often thousands of dollars per year to these carriers, and should have the right to expect true compensation for monetary losses—particularly if they are not at fault for an accident.


  1. Gravatar for DVexpert

    I believe the cases failed for another reason - poor lawyering. DV cases, especially class action cases, most usually fail because lawyers make no assertion that cars are not as good in a repaired state as they were before the injury. In order to keep cases simple they do not want to discuss repair errors or things that can't be fixed on the thousands of cars in the class - too confusing to judges and jurors. Yet following repairs on every single car there will be physical flaws that diminish the value that never get brought to light. If the cars are repaired to perfection I believe the case could be made that the policies do provide a valid exclusion. But since there is no perfect repair that scenario is a fairytale. Every car has a myriad of flaws and defects following an accident and repair that were not present before the loss. So, if a car can't be fixed properly or cost effectively there must be some means of compensation in order to indemnify. To win, lawyers need to focus on the poorer condition of a car after a loss (even with a perfect looking repair) as compared to its condition before the loss.

  2. Gravatar for Andrew W.

    Thank you for this information. I think it is important to point out that this decision deals with first party claims for diminished value and not third party claims.

    If you ask the question on the Internet, can I make a diminished value claim, most people answer no. This is incorrect. The proper question is who can I make a diminished value claim against?

    Most States, if not all, allow a claim for diminished value against the at-fault party (a third party claim). This is a tort action and not governed by the language of the insurance contract.

    A claim against your own insurance carrier (a first party claim) is a contract action and thus governed by the language of the contract.

    Decisions like this are very informative but I fear that they further the incorrect notion that you can not make a diminished value claim after a car collision. Everyone who writes about diminished value would be wise to differentiate third part and first party situations.

    Thank you for allowing me to comment and keep up the good work.

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