Auto InsuranceQuestion 27 of 215

Following a covered collision repair, a California insured argues that her car is now worth less on resale than before the accident because of its accident history. With respect to first-party diminished value (the loss of resale value) claimed against the insured's own physical damage carrier, California generally:

a.Requires the insured's own collision carrier to pay diminished value in addition to repair cost
b.Does not require an insured's own collision carrier to pay first-party diminished value when the insurer has properly repaired the vehicle
c.Requires the at-fault driver's insurer to pay double the diminished value
d.Treats diminished value as a punitive damage available only in fraud cases

Explanation

California courts have generally held that, where an insurer pays to properly repair the vehicle to its pre-loss condition, the insurer's contract duty is satisfied; the standard PAP does not separately require the insurer to pay diminished value. Diminished value is more often pursued from the at-fault driver in a third-party claim. Some jurisdictions handle this differently, but California first-party physical damage claims generally do not include diminished value.

Law Reference: California common law on first-party diminished value

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