Posted On: August 27, 2007, 2:49 pm CDT

Posted By: Umpiire

Sad to read some of the previous comments. Let's actually review this with some maturity, in lieu of emotion.

First, diminished value is VERY real. If you argue the opposite, then please give me your brand new car, let me wreck and repair it, and keep that ignorant smile on your face.

Next, please separate liability from physical damage. You darned well owe it on a liability policy -- so you'd better figure it out. Don't quote me nonsense that it cannot be determined... because we do manage to value "emotional distress" every day in the claim business, so I'm confident the property equivalent can be handled. On the physical damage side, address it on the policy and make your choice. If you want it covered, buy that coverage, and pay the difference. If you're one that doesn't care, then allow the policy to exclude it on the PHYSICAL DAMAGE side.

We're in the insurance business -- SELL MORE INSURANCE. Create diminished value as an option -- just like replacement cost or actual cash value are options. The policy, on physical damage, does not generally intend to cover this loss now... so hooray, we get to sell more insurance than before, AND, we get to have less arguments with our client later!

Finally, stop the "Chicken Little" nonsense. Insurance carriers do not "pocket" the difference... they base their rates on the loss value, and the premiums are simply less. If we define it as not covered on physical damage, then there is plenty of capacity to write it, charge the right rates, and move on. If we have to pay it (liability or physical damage), then the rates are simply going to reflect that going forward.

What is a good debate is whether it should be covered, or not, going BACKWARDS. Did the rate set intend for that coverage? In liability, it did not, but should have, and the insurer would only pay it if that amount was demanded. They shouldn't be paying an adverse party MORE THAN THEY DEMAND... that's just dumb. In APD, it did not intend to cover it, and the court should not interpret that it did, for THAT COVERAGE. If that's not patently clear in the policy wording, then fix it -- and then start selling that extension as an option (I suspect most folks would buy it, just like most folks buy RC rather than ACV). Now that's a worthwhile argument!