Automobile Accidents: Recovery for Loss of Value
The typical fact situation is as follows. Individual A is driving and involved in an accident with Individual B. Individual B is completely at fault. B’s insurance company pays for the cost of repair to Individual A’s auto. However, Individual A is not satisfied. Individual A believes that the simple fact of an auto accident, even though the damages have been repaired, has resulted in a loss of value to his automobile. When he goes to sell it or trade it in, the accident will be a matter of public record; and will obviously affect the value of the car when compared to one that was not involved in such an accident.
The question that invariably arises in the foregoing is whether or not this “loss of value” is recoverable; and if so, is it covered under the standard policy of auto insurance? These questions were addressed in the case of Hellenbrand v. Hilliard, 275 Wis. 2d 741 (Wis. Ap. 2004). In that case, Individual A had purchased a 2001 Honda Odyssey for $24,500. Five months after the purchase, the minivan was seriously damaged in an accident caused by an American Family insured. The American Family driver was completely at fault. The minivan was repaired. However, Individual A bought another minivan; and then immediately sold the repaired minivan for a price of $19,000. At the time of the sale, the fair market value of a 2001 minivan (undamaged) was approximately $23,000. As is evident, there was a $4,000 spread between the fair market value and the actual sales price. Individual A was of the opinion that, in addition to the cost of repair, American Family was required to pay this loss in value. Obviously, American Family disagreed.
Litigation ensued. At the trial court level, the circuit court held in favor of American Family. Individual A appealed. One of the questions on appeal was whether or not Individual A is entitled to damages for “loss of value after repair damages”. The minivan had been repaired at a cost of about $11,000. The repair cost was not in dispute. What was in dispute was the $4,000 of “loss of value” to the car. American Family refused to pay on the basis that in Wisconsin, when an automobile is damaged but not destroyed, the proper measure of damages is the cost of repair. Individual A simply argued that the purpose of damage recovery is to make an injured party whole. Individual A had not been made whole even though the minivan was repaired, because the value of that repaired minivan was approximately $23,000 before the accident and $19,000 thereafter.
To make a long story short, the Wisconsin Court of Appeals agreed with Individual A. In that regard, the Court noted:
Of course, there are several qualifications to this rule. First, there may be specific statutes or case law that make exceptions. Secondly, it is doubtful that the rule can be applied if the cost of repair plus the loss of value exceed the fair market value of the item on a pre-injury basis.
I think there is merit to the concept of loss of value in the foregoing circumstance. Most people today seem to run a CAR FAX check before buying a used car. This check will disclose any accidents involving the vehicle. My experience is that a damaged car (even if repaired) sells for a lower price (or has a lower trade value) than does an undamaged car, all else being equal. This is simply human nature.
Although the Hellenbrand case was decided in 2004, I have not seen any additional litigation in this area. Is it because insurers routinely recognize loss of value claims? I doubt it. Is it because loss of value claims have not become routine? I suspect so. I do have a worry. I believe that insurance companies, who do not like the Hellenbrand decision, can write into their policies, exclusions for loss of value after repair value type of claims. This means that the carrier won’t provide coverage; and the policy holder is at risk for payment of this claim. To me, this is unacceptable; and I would look at a different carrier for coverage. I hope that insurance carriers do not exclude loss value claims. There is no need to. All the carrier needs to do is recognize the “value loss” as an item of damage, underwrite the risk accordingly, and change an appropriate premium.
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