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After the plaintiff’s vehicle sustained damage in a collision his insurance carrier paid the full cost of repairs, less a deductible. The plaintiff claimed that the policy covered loss for the diminished value of his vehicle, but his insurance company disagreed.
The plaintiff filed a class action lawsuit, alleging breach of contract, insurance bad faith, and violations of the Washington Administrative Code and Consumer Protection Act (CPA).
In a published opinion the Washington Court of Appeals ruled in the plaintiff’s favor.[1]
A vehicle suffers diminished value when it sustains physical damage in an accident, but due to the nature of the damage, it cannot be fully restored to its pre-loss condition. The remaining, irreparable physical damage, such as, for example, weakened metal which cannot be repaired and which results in diminished value.
In contrast, stigma damages occur after the vehicle has been fully restored to its pre-loss condition, but it carries an intangible taint due to its having been involved in an accident.
The Court held that the insurance policy language interpreted in the manner in which the average insured would understand it covered diminished value.
The Court remanded on the issue of a Consumer Protection Act Claim and upheld class action certification.
[1] Moeller v. Farmers Insurance Co., 30880-1-II.