Laws of Diminishing Returns

The insurance companies believe that if it’s a car, it will be driven, and if driven enough, it will get into accidents

by Michael Sheehan

I recently received an email regarding a 430 Scuderia that had hit a deer, with the damage described as “very lightly hit, the bumper is scratched and the hood is lightly dented.” Further emails stated that the owner, who was a passenger in his own car, felt the diminution in value to his 430 because of the damage should be $100,000 over and above the cost of the actual repairs, and he expected the driver’s insurance to cover his extra “loss.”

Two distinct schools of thought

There are two distinct schools of thought on diminution in value: Some owners and their always-eager lawyers are advocates of compensation, while the insurance companies are equally adamant that when they pay to repair a damaged vehicle, if those repairs are to “as-was, or better” condition, then there is no diminution in value just because the vehicle was involved in an...