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Victims of Vehicle Damage are Entitled to Recover Diminution of Value in Iowa


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1/14/2014
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Car accident repairs in personal injury and/or property damage cases create a wide spectrum of viewpoints on the amount of damages that is proper.  In Iowa, the Supreme Court issued an influential ruling in this area of law in 1968. Halferty v. Hawkeye Dodge, Inc., 158 N.W.2d 750 (Iowa 1968).  The Plaintiff left his car at a repair shop for minor damage.  The car was damaged while at the Defendant's auto shop, and Plaintiff sued for diminution of value.  The Court held that the car, although repaired, was not placed in as good conidtion as it was before the injury and the proper measure of damages would be the difference between its reasonable value immediately before and immediately after the accident (i.e. diminution of value damages).  As precedent for future cases involving property damage, this case allows for awarding the victim the difference in value before and after the accident, in addition to the reasonable cost of repair.

In 1982, the Iowa Supreme Court expanded their earlier ruling, establishing three rules, or rather guidelines, to assist in determining the amount of damages to be awarded.  These rules are as follows:

1) when a car is completely destroyed or the cost of repair exceeds the difference in the car's market value before and after the damage, the correct amount of damages is the lost market value, plus the value attached to the use of the vehicle while it was being repaired;

2) when the damage to the car can be repaired so that it is in as good a condition as it was before the accident, the correct amount of damages is the reasonable cost of repair, plus the value attached to the use of the vehicle while it was being repaired;

3) when the car cannot be repaired such as to place it in as good a condition as it was before the damage, the correct amount of damages is the difference between its reasonable market value before and after the accident, plus the value attached to the use of the vehicle while it was being repaired. Long v. McAllister, 319 N.W.2d 256 (Iowa 1982).

These guidelines reflect a common consensus across most U.S. jurisdictions.  In Indiana for example, the state Supreme Court ruled most recently in 2005 that an insurer must pay any diminished value of an insured's vehicle, in addition to any costs of repair up to the policy limits. Dunn v. Meridian Mutual Insurance Company, 836 N.E.2d 249 (IN 2005).  In the District of Columbia, the Court of Appeals also upheld the use of these guidelines and awarding diminished value in property damages cases. American Service Center Associates v. Helton, 867 A.2d 235 (DC 2005).  The basis for these guidelines and courts adopting them across the country comes from the Restatement (Second) of Torts regarding damage to chattels.  A discussion of this provision and the current case law on this topic in Iowa is the subject of Thursday's blog post.



Category: Car & Property Damage


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