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

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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