A man who wrecked his new truck is not entitled to payment from his insurance company for the resulting loss of market value, the New Mexico Court of Appeals ruled.
In the first ruling in New Mexico on the issue, the court said it was following the trend in other states to disallow recovery for diminished market value.
The plaintiff in the case, Robert Davis, wrecked his truck two months after buying it. His insurer, Farmers Insurance Co. of Arizona, had it repaired.
Davis then traded the truck for another new one, accepting a trade-in value he estimated was $15,000 less than his previous truck was worth before the wreck.
He claimed that under his insurance policy — which stated that Farmers would “pay for loss to your insured car caused by collision” –that he was entitled to compensation for the reduced market value as well as repairs.
Farmers rejected that claim and Davis sued in state district court in Bernalillo County, which ruled for the insurance company.
The Court of Appeals said the plain language of Davis’s insurance policy gave Farmers three options: cash payment, repair or replacement.
The policy did not provide coverage for diminished market value in addition to adequate repairs, the court held.
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