Diminution of Value - Current Case Law in Iowa for Property Damage

Diminution of market value regarding property damage was the subject of Tuesday's blog post.  Today's post will expand on that topic, and discuss the current case law in Iowa.  In 1995, the Iowa Supreme Court in Papenheim v. Lovell affirmed the guidelines established in their 1982 case Long v. McAllister.  The Court used the guidelines to determine that the victim of a car accident was entitled to damages under the third standard; that is, that he should receive the difference in market value of the car before the accident and after.  In that case, the trial court originally found that the repairs made to the Plaintiff's car placed it in as good a condition as it was prior to the injury, and awarded him damages under the second standard (i.e. the reasonable cost of repair).  The Supreme Court disagreed with the trial court, reversing in favor of Plaintiff and awarding him damages in the amount of the difference between the reasonable market value of the car before and after the accident.  In this particular case, the damaged car was in near new condition, such that repairs would make it operable again, but could not make it "new" again.  The Court stated that allowing diminution in market value where repairs cannot restore the vehicle to its pre-accident condition is consistent with the general rule that the measure of damages should be the amount necessary to compensate for all detriment suffered by the victim to "make him whole."  This general rule derives from the Restatement (Second) of Torts section 928 for damage to chattels, and is applied in most jurisdictions.

The Restatement (Second) of Torts section 928 states: When one is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for

(a) the difference between the value of the chattel before the harm and the value after the harm or, at his election in an appropriate case, the reasonable cost of repair or restoration, with due allowance for any difference between the original value and the value after repairs, and

(b) the loss of use.

When you have a property damage claim for your car, you can make a reasonable argument to receive damages for diminution in market value when the repairs are not adequate to place the car in its pre-accident condition.  You will need evidence and proof of the differences in value, such as a showing that the car was brand new, or almost new, prior to the accident.  You can also do this by obtaining valuations by car repair shops and/or experts showing that the value of the car after the repairs is less than the value of a comparable car that had not been damaged.  If you need assistance in negotiating with your insurance company to obtain the proper amount of damages you are owed, call our office for a consultation.

2 Comments
Francis, Get whoever you bought it from to give you a written opinion if they believe the value has been diminished. They you'll know and won't be guessing. Nice car by the way!
by Steve Lombardi December 5, 2016 at 03:20 PM
My vehicle was recently hit by glass that came off of another vehicle. Their insurance company has agreed to fix my car (4,800) estimate in repairs. My issue is that this is a "collectible" and "numbered" production car. I am afraid it's possible value has taken a hit since it was in new condition (around 1,800 miles at the time of the incident). I would like to know how I can pursue and recover the value lost due to the malfunction in their vehicle causing damage to mine. My car is a 2016 Ford Shelby GT350.
by Francis Musignac December 5, 2016 at 03:13 PM
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