Diminution in Value under GKLL

May 26, 2015

What is your opinion on diminution in value for a customer's auto involved in a garagekeepers covered loss?
Does diminution in value meet the definition of “loss” in your opinion? There is no exclusion for diminution in value in this section of the coverage form.

The ISO garage coverage form, CA 00 05 03 10, section III Garagekeepers Coverage states: We will pay all sums the “insured” legally must pay as damages for “loss” to a customer's auto…..

Kentucky Subscriber

It is our opinion that diminution in value does not meet the definition of loss. Loss is defined as direct and accidental loss or damage and we see the key word as “direct”. Diminution in value is not really a direct physical loss to the vehicle; it is an indirect, consequential and economic loss to the vehicle because of the direct physical loss. Of course, some courts are of the opinion that when a policy does not specifically address the diminution in value question through, for example, an exclusion, diminution in value is then covered. You might want to check with an attorney who is familiar with court rulings on the subject in your area to be sure.

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