New Recovery Benefit for Damage to Buildings

The Georgia Supreme Court recently announced that its 2001 decision that permitted the owners of motor vehicles to recover for the loss in value of a motor vehicle that had been damaged, in addition to the cost of repairing that damage, also applies to insurance policies covering damage to buildings.  Under this new holding, real property owners whose buildings are damaged by a covered casualty may be able to recover for any reduction in the value of the building “resulting from stigma due to its having been physically damaged”, in addition to recovering the cost to repair such damage.  The Supreme Court held that whether recovery for any such reduction in value was available would depend on the language of the specific insurance policy in question.  Unfortunately, the court did not decide whether a recovery for reduction in value of the building in question was available in this case.  What insurance policy language will permit such a recovery will be decided in later cases.  As they are decided, I will let you know what the courts have to say.

Agents should be aware of this new recovery benefit and advise their insureds of its availability where a claim for reduction in value of a damaged building after it was repaired could be made.  The failure to do so could expose an agent to an E&O claim by the insured.