Q. Does an insurance company owe diminished value when settling a claim?
A. This issue was addressed in a Commissioner’s Bulletin in April 2000. It says:
“The position of the Department is that an insurer is not obligated to pay a first party claimant for diminished value when an automobile is completely repaired to its pre-damage condition. The language of the insurance policy does not require payment for, or refer to, diminished value.’
But that does not preclude recovery in a third-party claim. The bulletin goes on to state’
“An insurer also may be obligated to pay a third-party claimant for any loss of market value of the claimant’s automobile, regardless of the completeness of the repair, in a liability claim that the third-party claimant may have against a policyholder. Further, an insurer may be obligated to pay a first party claimant under the uninsured/underinsured motorist coverage provisions of the policy, for any loss of market value of the first party claimant’s automobile, regardless of the completeness of the repair.”