Diminished Value Ohio

In Rakich v. Anthem Blue Cross and Blue Shield, 10th Dist. No. 06AP-1067, 2007-Ohio-3739 the 10th District Court of Appeals held, in a 3-0 decision, that Plaintiffs may recover for the diminished value to their car after repair.

The Rakich Court noted that the traditional measure of property damage was either the cost of repair or the difference in value between the time immediately before and after the damage, but not both. Rakich argued that while she had been compensated for the cost of repairs, she still had not been made whole. The Court's ruling followed the common-sense argument that a wrecked-and-repaired car is not worth as much as a car that has never been wrecked, and held that this difference in market value is a compensable damage. The Rakich Court found that allowing recovery for diminished value was consistent with the standard measure of damages in a tort case: the amount which makes the plaintiff whole. Therefore, the Court permitted Rakich to recover for diminished value if she could show that the repairs were insufficient to restore her car to its pre-crash value.

Court of Appeals Rules Residual Diminished Value Recoverable in Ohio
Reprinted with permission of CollisionWeek (www.collisionweek.com)

In Rakich v. Anthem Blue Cross and Blue Shield, the Ohio 10th District Court of Appeals held, in a 3-0 decision, that plaintiffs may recover for the diminished value of their car after it has been repaired.

The court made a distinction in the case between diminished value- traditionally defined as the difference between pre and post accident value of a vehicle, and what it called the "residual diminution in value"- defined as the difference between preaccident and post-repair value of the vehicle.

Prior courts have held that a claimant may recover either the repair cost of a vehicle, or the diminished value of the vehicle in the event of a total loss. However the 10th District Court found that there are indeed cases where this traditional "either or" proposition might not make the claimant whole.

The insurer argued that the vehicle owner is owed nothing because the market value of the repaired car, compared to the market value of a similar vehicle never before damaged, is purely speculative and cannot be determined. The judges ruled however that the value of the vehicle immediately following its repair is no more speculative than the market value of the vehicle immediately before or immediately after the collision, both of which are routinely determined and relied upon to settle claims every day.

The insurer also argued that Rakich was attempting to double-dip, and recover both the cost of repair and the diminution in value. Here again, the court disagreed, making the distinction between "gross diminished value" and "residual diminished value."

The court wrote in its decision that the "Appellant does not seek an additional award of the difference between the market value of her vehicle immediately before and after the accident, but, rather, contends that the cost of repairs did not fully compensate her for the loss..."

"Unlike the gross diminution in value that Ohio courts have recognized as the preferred method of calculating damages to a motor vehicle, the residual diminution in value, realized because of a vehicle's involvement in a collision, does not overlap the cost of repairs," the court found.

The court noted that none of its research revealed any Ohio case that previously addressed this type of diminished value.

The ruling did not award any specific damages for diminished value in this case, but rather decided that there is nothing in Ohio law which prevents a claimant from pursuing a financial award to compensate for a loss of "residual diminished value" when it can be shown that the repairs were insufficient to restore the vehicle to its pre-collision value.

A separate hearing will determine the actual dollar value of the loss in this case.