In this podcast, the lawyers from Mazow McCullough talk about diminished value claims. They explain how these claims address the reduced value of your vehicle after an accident. Then, they explain how insurance companies are trying to avoid paying diminished value claims even though the courts have held up the rights of victims to claim these losses.
John Maher: Hi, I’m John Maher. I’m here today with Rob Mazow and Kevin McCullough of the Law Office of Mazow McCullough. Today we’re talking about diminished value cases. Rob and Kevin, welcome.
Rob Mazow: Thanks, John.
Kevin McCullough: Thank you, John.
What Is Diminished Value?
John: So Rob, what is diminished value? What does that mean?
Rob: Diminished value is the amount that a vehicle that has been in an accident… the difference between what that vehicle was worth before it was in the accident, and what it is worth after it has been in an accident and repaired.
There is something called a diminished value or a stigma damage that says that we argue your car that’s been in an accident is now worth less. Even though it has been repaired, it is worth less due to the fact that it has been in an accident and you’re going to get less in the open market or in a private sale because of that accident and because of the repair.
John: Right. So if you’ve been in an accident and it wasn’t your fault, your car now is worth less than it was before, and you should be able to recover that amount.
Rob: That is our argument and actually sitting here next to the guy that was instrumental in changing the law, because Kevin, as you may know, argued this very issue in front of the Supreme Judicial Court, which is the highest court in our state, and before he did that, there was no real clear picture.
But after having been successful at this case a couple of years ago, we now know that the Massachusetts courts recognized this as a damage that a person can recover if they’re able to prove that their vehicle has sustained a diminishment in value.
Background on Diminished Value Claims in Massachusetts
John: Right. So it was actually Kevin, I believe just a little over a year ago now, that the case was finally concluded and that diminished value sort of now there’s a precedent for this in Massachusetts. Talk a little bit about that and where we stand now a year later with diminished value.
Kevin: So John, great question, and it’s a perfect example of that old adage, the wheels of justice turned slow. The case that was decided by the Massachusetts Supreme Judicial Court last October started five years before that court heard that issue. And the case that was decided by the Supreme Judicial Court was an issue under the 2008 version of the Massachusetts automobile insurance policy.
The court ruled on that case, which was based upon that edition of the policy and remanded the case back to the Superior Court where we are still fighting a year later at the Suffolk Superior Court over the issue of diminished value and whether or not it’s covered under the 2008 policy and whether or not the insurance companies have to pay it. Since that time, the 2016 edition of the Mass auto policy has come out, and we’re at a point in time now in 2022 going into 2023, that every policy that’s been in effect for the last three years has been written under the 2016 edition of the policy.
The insurance companies and the insurance industry saw this issue coming with that first case under the 2008 policy. Knowing that that issue was working its way up in the court system, changes were made to the 2016 edition of the Mass auto policy, whereby the insurance companies are trying to carve out, despite what the highest court in the state said about the issue and the damages, they’re trying to carve out their requirement that they have to pay for those damages. So now there are additional cases pending at the Suffolk Superior Court fighting the same issue under the 2016 edition of the policy. So the issue is no more clear now a year later in regards to the coverage and who pays it.
However, focusing on the good that has come out of the Supreme Judicial Court decision from last October involving the Jarrett McGilloway versus Safety Insurance Company is that for the first time ever, the State of Massachusetts through the Supreme Judicial Court recognized that diminished value damages exist, and it is a recognized damage under the property damage portion of the law and it is recoverable. So that still stands, that still exists and it can be pursued. But the fight that we have here at this office and what we’re trying to do in helping consumers with diminished value issues and damages is to make sure that those damages get paid by the insurance company who provides the coverage for the car that caused the accident. And despite that case, and despite the fight that’s ongoing, the insurance companies are still disputing that it’s covered under the policy.
How Insurance Companies Try to Avoid Paying Claims for Diminished Value
John: And are the insurance companies basically trying to put language into their policies that say that they are not going to pay for diminished value? Is that kind of essentially what they’re doing?
Kevin: It’s literally what they’re doing. They’re going to the exact portion of the automobile insurance contract that the court made its decision on last year. And they’re changing the language in that to try to prevent paying the diminished value damages under the policy while working their way around the order of the Supreme Judicial Court. They’re trying to change that language.
And it truly is an effort to avoid compensating consumers who have suffered that damage. We know that there’s an entire industry of CARFAX and organizations like that and anyone who’s had a vehicle that’s been damaged in a car accident, even though it’s repaired and bringing it in for sale or trade-in. So the first thing that’s talked about as far as negotiating a price would be the salesperson reminding us that we have this collision and we’re going to get $3,000 less or $4,000 less of a trade-in. So yeah, it is an issue that’s out there and it’s something that we’re fighting for, for consumers.
How Mazow McCullough Is Working to Get Insurance Companies to Cover Diminished Value
John: And you’re trying to make it so that… Basically you’re saying that the insurance companies should not be able to put this language into their policies that says that they’re not going to pay for diminished value because like you said, it has now become an established damage in Massachusetts that diminished value does exist and it should be recoverable.
Rob: Exactly. Exactly. It would be like them trying to limit a personal injury claim and say, “Well, we’ll cover everything except if you break a bone. We’re going to carve that out.” And that would just never fly because you can’t do that. And the same argument would be made here that this is a damage that your insured caused. It’s covered under the policy. If we show you what the number was, what the damage was, you owe it.
Statute of Limitations on Diminished Value Claims
John: Right. So some basics of the diminished value claim. Is there a statute of limitations on claiming a diminished value amount from an accident that you’ve been involved in?
Kevin: There is, John. And so diminished value damages are damages that here in Massachusetts flow from a tort damage and it’s a fancy way of saying someone else is responsible or someone else is at fault. And the legal remedy that we use when that happens and someone suffers a damage, is a negligence claim that gets filed at the court.
And because diminished value is a property damage or an aspect of property damage, it is covered by that negligence statute. And it is a three-year statute of limitations, which means that the person who has suffered that damage should either recover for those damages, present them to the insurance company and settle those damages or hire an attorney within three years from the date of the accident.
Rob: Or file a complaint within three years of the accident.
How to File a Claim for Diminished Value
John: Okay. And so how does a person go about filing a claim for diminished value?
Rob: It’s just like any other tort lawsuit, negligence lawsuit. They can do it themselves. They can go to a court and file a small claims action. They can file a district court action. If they come here, if it’s just a standalone diminished value with no other personal injury claim involved, it’s just a standard negligence lawsuit, a piece of paper that we bring to the court. We file the court with a proper filing fee and have it served on the owner of the vehicle that was in the accident. And the insurance company for that owner will provide a defense and either defend it through trial or resolve the case.
John: Right. You brought up a good point, which is that you don’t have to have, say, been injured in the accident physically. The diminished value could be the only issue that you had with the accident, basically the only claim that you need help with.
Rob: That’s correct. And what we hope to see eventually when this begins to get a little bit more clarity is people bringing these claims as is their right. Opening up a new opportunity for people to be made whole when they otherwise would’ve had to walk away and just accept the loss of the value of their car.
Now what we’re hoping to do is educate people to let them know that your car has been injured, your car has been damaged, your car has suffered a loss. Make the claim to the insurance company that caused the accident, and we’ll see if we can’t get you some recovery for that.
Examples of Diminished Value Cases
John: Right. Are there any specific examples of diminished value cases that you can mention or maybe different types of ones that people might not be necessarily thinking about?
Kevin: Absolutely, John. So the responsibility or the burden of proving these damages and getting paid is on the person who has suffered the damage or that person’s attorney. So it’s analyzed by the insurance companies in different ways and calculated in different ways. But you could have a diminished value claim for damage to your vehicle if it’s an antique, if it’s a much older vehicle or if it’s a brand-new vehicle.
That’s an assessment that must be done on that particular issue as far as trying to calculate is there recoverable damage, can we prove it, and how much is it? But the spectrum of the vehicles available for a person to seek diminished value damages, it can be dramatic, as I mentioned, from antique vehicles that are worth a lot of money to the brand-new vehicle.
Typically, with the newer vehicles, the claims that the insurance companies consider and evaluate in working through settling some of these claims are typically within a five-year mark, within five years old. And oftentimes you may be able to show diminished value damages for an older vehicle, but the amount may be so small that it wouldn’t be worth filing a lawsuit or an attorney taking on that case. But you can still pursue that on your own in small claims.
So the real thing to let everyone know and be aware of is if you have a vehicle, whatever type of vehicle, however old it is, and it’s been damaged due to someone else’s fault, even after that vehicle’s repaired, if you think that you’ve suffered some damages or if you think that you’re going to take a hit when you go to trade that vehicle in or sell the vehicle, reach out to us, reach out to an attorney and do that analysis and see if it’s worthwhile. And then the answer may be it’s just not, it’s not there. Or yeah, you may be out 10, 12, $15,000 and here’s why we need to pursue this for you.
John: Well, that’s really great information. Rob and Kevin, thanks again for speaking with me today.
Rob: Thanks, John.
Kevin: Thank you, John.
Go to HelpingInjured.com to Learn More
John: And for more information, you can visit the website at helpinginjured.com or call 978-744-8000.