Massachusetts Judge Rejects Auto Insurance Class Actions Over Diminished Value

July 17, 2023

A judge in Massachusetts denied class certifications for claimants seeking payments from two insurers for the lost resale value of their motor vehicles that were damaged in accidents and then repaired.

Suffolk County Superior Court Justice Kenneth W. Salinger ruled that the damage and liability determinations being sought require individualized proof and cannot be addressed through class actions.

Plaintiffs Jarret McGilloway, Linda Estrella and Adam Ercolini sought class certifications for their claims against Safety Insurance Co. and the Commerce Insurance Co.

The two insurers allowed plaintiffs’ claims for third-party collision damage and paid to repair their vehicles and restore them to their prior condition, but did not pay for alleged loss of resale value.

The plaintiffs moved for class certifications on their claims for breach of contract and for violation of the state’s consumer protection law. They filed separate motions, seeking certification of one class with claims against Safety and a separate class with claims against Commerce.

The proposed class with claims against Safety would have at least 26,000 members, while the class asserting claims against Commerce would have roughly 470,000 members.

The kind of loss that plaintiffs sought to recover is known as inherent diminished value or IDV. This term refers to “the concept that a vehicle’s fair market value may be less following a collision and repairs” and it equals the “difference between the resale market value of a motor vehicle immediately before a collision and the vehicle’s market value after a collision and subsequent repairs.”

The class action move followed a 2018 Massachusetts Supreme Judicial Court ruling that the standard Massachusetts auto policy required insurers to pay third-party collision damage claims for IDV to vehicles that are damaged and subsequently repaired.