Oregon Court of Appeals allows recovery for diminished value in first party automobile claim
December, 2006
On December 20, 2006, the Oregon Court of Appeals held in Gonzales v Farmers Ins. Co. of Oregon, et al., No. A128598, that the policyholder plaintiff was entitled to recover payment from his first party automobile insurer, in addition to the cost of repair, for his vehicle's "inherent diminished value" following a collision. In Gonzales, the trial court had granted summary judgment for Farmers, based primarily on the policy's liability limitation which read, in pertinent part, as follows:
"[Farmers'] limits of liability for loss shall not exceed: 1. The amount which it would cost to repair or replace damaged or stolen property with other of like kind and quality; or with new property less an adjustment for physical deterioration and/or depreciation."
The Court of Appeals reversed, by relying on two prior cases from the Oregon Supreme Court, Dunmire Co. v. Or. Mut. Fire Ins. Co., 166 Or. 690, 114 P.2d 1005 (1941), and Rossier v. Union Auto. Ins. Co., 134 Or. 211, 297 P. 498 (1930). In both Dunmire Co. and Rossier, the defendant insurance companies' respective policies contained a "Limits of Liability" provision similar to the liability limitation in the Farmers' policy. In Dunmire Co. and Rossier, the Supreme Court held that recovery by the insured is not limited to the cost of repair, unless such repair actually restored the automobile to as good condition as it was in before it was damaged. Click here to view the Court of Appeals' opinion.
For more information, please contact your Bullivant insurance counsel.