Event: Loss Executives Association (LEA) 86th Annual Meeting & Mid-Winter Educational Program 

Presenter: Matthew J. Smith

Presentation: Diminution of Value Claims on Property Losses

Nearly a quarter-century ago, claims for diminished value to automobiles following a collision began appearing across the United States. These claims were dismissed at first by most insurers as being improper, un-documentable or excluded under auto policies. Today many states now recognized diminished value auto damage claims if properly presented.

Not surprisingly, the same theories supporting diminished value to automobiles, are now starting to be asserted in an increasing number of jurisdictions on property losses. These claims are arising under both commercial and residential policies. Often these claims arise where after a major loss such as fire or flood, the insured claims even once rebuilt the property has a lower, or diminished, value since it is not in the same condition as the original construction. Insurers often claim the structure was rebuilt to the same, or perhaps even better standards than the original. Also diminished value claims have been asserted for the “stigma” associated with a loss. These claims are even more difficult to properly consider or adjust as often they present both unique and unusual facts. For example, claims have been asserted for diminished value to a home based on a murder or suicide taking place. In commercial settings, similar claims have been asserted arising from an accidental fire but where tenants of the building perished. Insureds have claimed both diminished value of the property and loss of income based on the negative publicity and stigma arising from the loss.

These claims are arising in an increasing number of U.S. jurisdictions. As with auto damage claims before, insurers do not appear ready to address these claims and lawsuits. Are these covered losses? If so, how should they be adjusted and how do insurance carriers comply with the duty to treat all insureds fairly and equally while realizing in the current environment there is a “patchwork” of court decisions addressing these type of claims.

This course will address all of these, and many more questions as we look into the “crystal ball” of why may be ahead for insurers facing these type of new and innovative claims.   

Location: Tampa Marriott Waterside Hotel & Marina - 700 S. Florida Ave., Tampa, FL 33602

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