Question: Are you entitled to diminution in value of your vehicle involved in a collision?
Under common law tort doctrines, the measure of damages recoverable from a tortfeasor is generally adequate compensation for the loss sustained. It is also a correct statement that under Indiana law that that measure of damages includes diminution in value. But tort doctrines are not relevant when dealing with an insurance contract. Making a party “whole” is the province of tort law, but has no application when dealing with an insured and insurer. Since an insured’s claim is based solely on their policy, so their claim depends entirely on the terms of the contract. An insurance company’s obligation to indemnify requires it to restore the insured to the same position as before the event only to the extent required by the policy terms.
Note, insurance contracts are subject to the same rules as other contracts. Policy terms are interpreted from the perspective of an ordinary policyholder of average intelligence, and if reasonably intelligent persons may honestly differ as to the meaning of the policy language, the policy is ambiguous. Ambiguities are construed strictly against the insurer. If the contract defines “loss”, that provision gives the insurer a choice to pay the insured either the actual cash value of the vehicle or the costs associated with repairing or replacing the vehicle with property of like kind and quality.