Massachusetts Court Rules Insurers Must Pay for Inherent Diminished Value

Oct. 21, 2021—Massachusetts auto insurers are now required to compensate third-party claimants for the lost value of a vehicle even after it has been repaired. 

According to a Claims Journal report, the state’s highest court ruled Tuesday that standard auto policies issued in Massachusetts require compensation for “inherent diminished value.”

“Because the plain language of part 4 of the standard policy does not limit recovery to merely repair or replacement costs, such recovery must compensate a claimant for any loss of value the claimant incurred as a result of a collision, offset by the increase in value that may occur from repairs to the vehicle,” the Massachusetts Supreme Judicial Court said in a unanimous decision written by Justice Serge Georges Jr.

The opinion does not state whether it applies to first-party claims.