If a car was totaled in an accident for which I was not at fault, why can I only recoup the value of the vehicle and not the actual cost to repair it?

UPDATED: Sep 30, 2022

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If a car was totaled in an accident for which I was not at fault, why can I only recoup the value of the vehicle and not the actual cost to repair it?

It seams like the insurance companies decide how much the courts can or will pay for damages. Is it the courts responsibility to make me whole again?

Asked on December 23, 2015 under Accident Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

In the law, when property is damaged (or destroyed), the maximum the law allows the property owner to get is the then-current fair market value of the property. That is because if a car worth say, $10,000, is destroyed, the person who wrecked it destroyed $10,000 worth of economic value--the same as he'd taken $10,000 in dollar bills and put them in a shredder. Therefore, if the cost to repair or replace is higher than the fair market value, the property owner is limited to the economic value of the car--he can't get, say, $15,000 for a loss of $10,000. That would be unfair to the person who did the damage--you are making him/her pay for more than what he or she actually did (in my example, it would be like making him pay $15k when he shredded $10k worth of money)--and is also bad for society, because it would be to encourage economically counterproductive decisions and inefficient allocations of resources to pay more to fix something than that thing is worth.

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