THE LAW MATTERS Diminished Value Claims

accident for the diminished value of their vehicle. Diminished value claims are also permitted in some U.S. states.

Ontario, on the other hand, has had a “no fault” auto insurance system since 1990. Section 263 of the Insurance Act blocks claims for recovery of damages to an insured’s automobile, to its contents and for loss of use against anyone other than the insured’s insurer.

Zheng appealed from the dismissal of her claim for diminished value in the Brampton Small Claims Court.

Certas had elected to repair her vehicle as well as the legal issue of the trial judge’s error in denying payment of diminished value.

The appeal court was unable to find any error on the part of the trial judge. Certas decided to effect the repairs at its own expense and that decision was communicated to Zheng. Certas approved Zheng’s choice of body shop to conduct the repairs, and Zheng authorized the body shop to do the work.

By James Hamilton, Interim Manager and Legal Services Director, UCDA

The state of the law in Ontario on this subject does not bode well for those who seek to preserve value in a vehicle involved in a collision, damage or other insurance claim on a motor vehicle.

A fairly recent Divisional Court appeal case, Zheng v. Certas Home and Auto Insurance Co., provides some insight: https://www.canlii.org/en/on/onscdc/ doc/2019/2019onsc2753/2019onsc2753. html?resultIndex=1

As our readers likely know “diminished value” refers to the perceived loss of value of a vehicle following an accident-related repair. The argument is based on common sense: an informed purchaser will pay less for a vehicle that has been in an accident than for the same vehicle which has not been.

In certain Canadian provinces, individuals can sue those “at fault” for an auto

Zheng was involved in a motor vehicle accident for which she was not at fault. Her vehicle was damaged. A claim was made to her insurer (Certas), who chose to repair the physical damage to her vehicle. Despite the repair, Zheng sought to recover the diminished value of her vehicle from Certas.

At trial, Zheng provided expert evidence that the value of her vehicle had been diminished by $9,750 due to the accident. The Court, however, did not accept or award diminished value damages, on the basis that s. 6.6 of the Ontario Automobile Policy (“OAP”) gives the insurer the right to repair a vehicle rather than pay for the damage. The trial Judge interpreted the word “rather” in s. 6.6 to mean “either/or”. Certas, therefore, had the right to repair rather than pay damages.

The Court further found: “diminished value, although it exists in reality, is not included in s. 263(2) of the Insurance Act. Similarly, it is not in s. 6.2 of the OAP.” Zheng appealed on the issue of whether

Most importantly, the appeal court rejected Zheng’s argument that Certas’ repair of the vehicle did not preclude her claim for damages for diminished value. Justice Petersen found as follows:

Once Certas elected to exercise its right to repair Zheng’s vehicle “rather than pay for the damage,” it was only responsible for the cost of the repairs, up to a maximum of the actual cash value of the vehicle at the time of the accident (per s. 6.2 of the OAP). Its contractual obligation was simply to repair the vehicle, which it did.

Given this, Justice Petersen held that there was no need for him to determine whether the trial judge erred in concluding the claim for diminished value could not have succeeded under the OAP even if Certas had not made the choice to repair.

Costs of the appeal were awarded to Certas.

This appeal decision is consistent with case law establishing diminished value claims will not generally succeed in Ontario. ■