On May 29, 2012, answering a question certified to it by the Eleventh Circuit, the Georgia Supreme Court held that in addition to the costs of repair, a first-party property policy also may cover the diminution in property value. Royal Capital Dev. LLC v. Maryland Cas. Co., S12Q0209, (Ga. May 29, 2012). The Court held that its prior ruling that an automobile insurance policy required the insurer to pay for any loss in value of the repaired vehicle can be applied to other types of property insurance. In the case before the court, the policyholder’s commercial building was damaged by construction to an adjacent building. The property insurer paid $1.1 million for the estimated cost of repair, but refused to compensate the policyholder for the alleged diminution in value of the property resulting from the stigma of past physical damage. The Georgia Supreme Court held that, depending on the specific language of the policy at issue, the loss in value may be covered in addition to the cost of repair.
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Diminution of property value may be covered loss under property policy, Georgia Supreme Court holds
- Orrick Herrington & Sutcliffe LLP
- David Klein and Darren S. Teshima
- USA
- June 14 2012
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Ting Sim
Legal Counsel
Shell Eastern Petroleum