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Courthouses across Texas have found that 3rd party claimants, who have suffered a Diminution Loss, are entitled to collect and recover for their losses.  In fact Courts from across the Country have consistently awarded any and all related property damage losses that occur as a result of another's negligence.” See the Restatement of Torts 2nd.
 
This means that a claimant can seek and recover all of the following:

• The full cost of all necessary repairs;
• The cost of a rental vehicle during repairs or a loss of use payment;
• The cost of repair or replacement of damaged personal articles, such as child seat, sunglasses and other personal effects and
• The amount of diminished value suffered by a vehicle as a result of the loss. 

However, it is important that Texas Claimants of Diminution Losses understand that Texas Courts have mark a distinction between 1st Party and 3rd Party Diminution losses.
 
For a more detailed review of the law in Texas on 1st Party Diminution Claims, see the Schaeffer Decision that was decided by the Supreme Court of Texas.  The Court in Schaffer drew a distinguishing line in the awarding of damages on Diminished Value Claims in Texas.  It appears that under this decision, that 1st Party Claimants attempting to make a diminished value claim under their "Comp & Collision" Insurance Policy, will not be allowed to make such a claim.  However, it does appear, even from the Schaffer Decision that 3rd Party Claims against "at fault" drivers can be made in Texas.
 
In Schaeffer, the Supreme Court stated that “a diminished value measure of damages may apply when the insurer’s obligation is based on liability claim, which is coverage that is described and provided under a separate section of Texas Insurance Policies...Liability Policies are designed to protect the insured on obligations to pay for injuries to third party claimant that have been injured by tortuous conduct caused or created by the insured.” See SCHAEFER v. AMERICAN MANUFACTURERS MUTUAL INSURANCE COMPANY (2003)
 
In the Ludt Decision and the Terminix Decision the Texas Courts stated “an award of diminished value is recoverable in addition to the costs of repairs of the vehicle, assuming that the permanent reduction in value refers to that reduction occurring even after repairs are made.” See Ludt v. McCollum (Tex. 1988) and Terminix Intern. Inc v. Lucci. (San Antonio 1984).
 
For additional insight to this Texas nuisance between 1st Party and 3rd Part Claims for Diminution Losses, see Texas Department of Insurance Commissioner’s Bulletin, No. B0027-00, dated April 6, 2002.  The Texas Department of Insurance set forth the position that “An insurer is obligated to pay a third party claimant for any loss of market value of the claimant’s automobile, regardless of the completeness of the repair, in a liability claim that the third party claimant may have against a policyholder.”  The State of Texas Insurance Commissioner's Position is consistent with claimants pursuing a "diminution claim" for 3rd Party Losses in Texas.

A review of the Court Rulings from across the United States have also held that liability policies provide coverage for “diminution losses.” It appears that the majority of the courts follow a general rule of law to restore the injured party to as good a position as he held prior to the loss. See Restatement of Torts 2d, Sec. 901 (1979).  This issue and the measure of damages were discussed at length in the California Supreme Court Case Littlejohn.  In the Littlejohn Decision the Court discussed the measure of recovery for vehicle damage, “if the vehicle is not a total loss, is the vehicle's reasonable market value before the accident minus its reasonable market value after the accident, plus interest from the date of loss. Further, if repairs will substantially restore the vehicle to its former condition, the cost of such repairs will typically furnish proper proof of the loss. However, a vehicle may be badly damaged and be repaired so as to put it in a sound or good state, yet be worth much less than before the accident.”

Most Diminution Experts agree that an automobile's market value is diminished after it has sustained substantial damage in an auto accident, notwithstanding the fact that the resultant damage may have been properly repaired. In that regard, a demand can be made for the recovery of damages in excess of the cost to repair the vehicle, i.e., for recovery of an additional amount equivalent to the diminution in market value of the repaired vehicle.
 
To speak with an attorney, experienced in this area of the law, for free, call the Carabin & Shaw Law Firm and speak to Attorney Gary Gibson. Call 210-222-2288 or Toll Free 1-800-862-1260,