Massachusetts Weighs In On Third-Party Liability For Diminished Value Damages

A federal district court in Massachusetts has ruled that Massachusetts tort law does not provide for recovery of “inherent diminution in value” damages by a third-party claimant.

The Bay State had long been one of only 15 states that do not have any court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.

The decision is being appealed but appears to clearly place Massachusetts in the column of states which do not allow for the recovery of such damages from a third-party tortfeasor.

When an automobile is damaged in an accident and then repaired, the resale value may be less than a comparable automobile that has not been damaged. In other words, the damage results in a reduction or “diminution” in the resale value of the automobile.

An insured’s claim for this reduction in value may be made against a third party that negligently caused the damage to the insured’s automobile, or it may arise from a first-party claim against the insured’s own physical damage coverage.