Maine Supreme Court Rules Against Diminished Value Concept

August 8, 2002

According to the National Association of Independent Insurers (NAII), The Maine Supreme Judicial Court handed another victory to the insurance industry in a recent ruling where it rejected the diminished value concept.

“The Maine Supreme Court, like other jurisdictions across the country, recognizes diminished value concept for what it is—a flawed concept that isn’t covered in a standard insurance policy,” Gerald Zimmerman, senior counsel for the NAII, said.

The Court’s July ruling in Hall v. Acadia Insurance Co. stated that the limitation of liability provision in the plaintiff’s auto insurance policy limited losses to actual cash value of stolen or damaged property, or the amount necessary to repair or replace the property. The original claim was for $12,198 for repairs and an additional $4,975 for diminution in value.

“Although the Hall ruling does not address the issue of diminution of value in a third-party action, the Supreme Court’s position on the diminished value concept is unequivocally clear,” Zimmerman said. “We hope to see this issue laid to rest in other courts throughout the country as the concept of diminished value is flawed and even if accepted, not covered under the policy.”

Topics Legislation Maine

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