Published In: Insurance Law Newsletter – 11.Dec.18 December 11, 2018

Case Summary: No coverage for diminished value of vehicle following crash

The insured’s claim for diminished value of his vehicle following a collision was dismissed because the claim was excluded by Statutory Condition 4(5).

Insurance law – Automobile insurance – Diminished value – Interpretation of policy – Statutory provisions – Practice – Summary judgments

Dion v. Security National Insurance Co., [2018] A.J. No. 1222, 2018 ABPC 242, Alberta Provincial Court, October 17, 2018, G.W. Sharek Prov. Ct. J.

The insured was involved in a motor vehicle accident with a moose. The insurer indemnified the costs to repair the vehicle, but denied the insured’s claim for the diminished value. The ensuing action for coverage proceeded to a summary trial.

The insured argued that even if his vehicle was repaired to its pre-accident condition, it was now worth less by virtue of the fact that it was involved in the collision. In his view, this was a loss falling within coverage of SECTION C of Alberta Standard Automobile Policy S.P.F. No. 1. The insurer argued that Statutory Condition 4(5) of the S.P.F. No. 1 specified and limited its liability under SECTION C such that diminished value was not an insured loss. The insurer further argued that diminished value was not a direct loss as required by the policy wording.

SECTION C stated:

The insurer agrees to indemnify the insured against direct and accidental loss of or damage to the automobile, including its equipment.

The relevant portion of Statutory Condition 4(5) states that the liability of the insurer, “shall not exceed the amount that it would cost to repair or replace the automobile, or any part thereof, with material of like kind and quality…”

The Court held that diminished value was excluded by the wording of Statutory Condition 4(5) as it was not a claim relating to the actual cash value of the vehicle immediately before the accident, or the cost of repairs. The Court confirmed that the insurer’s liability was capped at an amount not to exceed the cost of repair or replacement of the vehicle with material of like kind and quality. Given this conclusion, it was unnecessary to consider whether diminished value was a direct loss under SECTION C.

This case was digested by Michael J. Robinson, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Michael J. Robinson at