Insurance, specifically property insurance, is a sticky subject. When we purchase insurance, our intention is to make sure our property is repaired or replaced if damaged. Well, a Georgia Supreme Court ruling regarding insurance companies and diminution in value on May 29, 2012 may change the way you look at property insurance.
In Royal Capital Development, LLC v. Maryland Casualty Company, the Court held that Maryland Casualty was in breach of contract when it did not compensate Royal Capital Development for loss of the post-repair decline in value of its commercial building. According to the Court, when “an insurance policy, drafted by the insurer, promises to pay for the insured’s loss, what is lost when physical damage occurs is both utility and value; therefore, the insurer’s obligation to pay for the loss includes paying for any lost value”.
Review the full opinion.
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