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Loss of Use Damages Can be Recovered in Cases of Total Loss if Payment is Unreasonably Delayed

Wrecked Cars.JPGThe Case:

James Bradley Morrison v. James Campbell, 2014 Tex. App. LEXIS 542 (Tex. App.-Fort Worth, Jan. 16, 2014, no pet. h.).

The Facts:

Morrison and Campbell were in an accident. Campbell filed a claim with Morrison's insurer that was initially denied. Campbell, however, later settled his personal injury claims with Morrison's insurer. Campbell then demanded property damages and loss of use damages from Morrison's insurer because the accident rendered Campbell's motorcycle inoperable.

A little over three months after property damage claim, Morrison's insurer gave Campbell a check to settle the property damage claim, but it did not include any money for the loss of use claim. The total time between the accident and payment of the property damage claim was one year, six months, and ten days.

Campbell subsequently filed suit against Morrison for loss of use damages. Morrison moved for summary judgment arguing that loss of use damages are not available in the case of a total loss. The trial court denied the summary judgment motion and Campbell appealed.

The Appellate Court's Analysis:

The court began with the general rule that if personal property (such as a vehicle) is damaged but is repairable, the owner may recover the cost of repairs and damages for loss of use, but if it is totally destroyed, the owner can recover only the market value and not loss of use damages. The court then reconsidered the current rule.

The court believed that the distinction between a totally destroyed vehicle and a repairable vehicle is a distinction without a difference. In either case, the owner could end up without the use of the vehicle while they either (1) waited on repairs or (2) waited on payment. The court then held that loss of use damages are available (in addition to fair market value) when a claimant under an insurance policy cannot replace destroyed property because of an insurer's unreasonable delay in paying the claim.

What to Take Away:

If (1) a property damage claim is presented, (2) it is a total loss, and (3) it is a valid claim, pay the property damage claim as soon as possible or you could end up paying for loss of use damages in addition to the fair market value of the property. Here, a period of one year, six months, and ten days constituted an unreasonable delay in paying the property damages. 

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