A Connecticut court just handed auto insurers a costly drafting lesson – skip a diminution in value exclusion in one policy section and coverage may follow.
The Connecticut Appellate Court, in a decision officially released May 12, 2026, affirmed that Amica Mutual Insurance Company had to defend its insured in a negligence suit where the third party sought damages for the lost value of her repaired BMW.
The collision happened on September 23, 2021, in Bloomfield. Douglas Gilleran, insured by Amica, hit a 2020 BMW 430i driven by Jasmin Harding. Harding sued Gilleran in July 2022, alleging she had suffered a diminution in value to her vehicle and was entitled to compensation under Connecticut law, along with claims for lost use of the vehicle, lost time, loss of life's enjoyment, and inconveniences.
Amica agreed to defend Gilleran under a reservation of rights but took the position that the policy did not cover diminution in value damages, either under Connecticut law or under the policy terms. In May 2023, the carrier filed a declaratory action to confirm it had no duty to defend.
The case hinged on a single undefined word. Part A of the policy covers a third party's property damage, which the policy defines as physical injury to, destruction of, or loss of use of tangible property. The policy never defines destruction.
Amica's pitch was simple: diminished value cannot be considered destruction. The court was not persuaded. Pointing to Black's Law Dictionary, the panel adopted a definition of destruction as harm that substantially detracts from the value of property, especially personal property. It then ran through decades of Connecticut and out-of-state authority recognizing that destruction can be partial, including a nearly century-old observation from the Mississippi Supreme Court that the wreck of an automobile may mean either a total or partial destruction.
A car that needs repair after a crash, the court said, has been partially destroyed. That puts diminution in value squarely inside the property damage definition.
The court then turned to the drafting itself, and this is the part carriers should sit with. Part D of the same Amica policy, which covers the insured's own vehicle, plainly excludes diminution in value losses. Part A has no equivalent exclusion. The court treated that as deliberate, reasoning that if Amica had intended to exclude diminution in value from Part A, it could have done so the same way.
An endorsement to the policy even defined diminution in value as the actual or perceived loss in market or resale value resulting from a direct and accidental loss. The concept was on the shelf. It just was not used in Part A.
The panel also flagged, in a footnote, that a diminution in value exclusion may not pass muster under §38a-334-5 (a) of the Regulations of Connecticut State Agencies, which obligates insurers to pay all sums the insured becomes legally obligated to pay for property damage caused by accident arising out of the ownership, maintenance, or use of a motor vehicle. The court did not decide that question, but the warning is on the page for the next case.
The duty to defend, the court reminded everyone, is triggered if at least one allegation of the complaint falls even possibly within the coverage. Harding's claim cleared that bar.
The judgment was affirmed.
