Insurance Coverage / Insurer Must Defend Diminution in Value Claim

Insurance Coverage: Appellate Court affirms lower court’s decision in declaratory judgment action, finding that insurer must defend its insured as diminution in value claim may fall within the coverage provided under the insureds’ personal automobile insurance policy:

In this declaratory judgment action, the plaintiff-insurance company appeals summary judgment rendered by the trial court regarding its duty to defend its insureds. At all relevant times, the defendant-insureds maintained a personal automobile insurance policy with the plaintiff, Amica Mutual Insurance Company. On September 23, 2021, the defendant was operating a motor vehicle insured by Amica when he collided with a motor vehicle owned and operated by the claimant who subsequently commenced a negligence action against the defendants. In the negligence action, the claimant alleged that she suffered “a diminution in value to her vehicle and under Connecticut law [she] is entitled to compensation for such.” Following the commencement of the negligence action, Amica sent the defendants a letter indicating that it reserved all rights to disclaim coverage with respect to the claimant’s negligence claim. Thereafter, Amica commenced this declaratory judgment action against the defendants and the claimant. The defendants and the claimant moved for summary judgment on the ground that no genuine issue of material fact existed and that they were entitled to judgment as a matter of law because the diminution in value claim potentially fell within the policy’s coverage. After hearing oral argument on the issue, the lower court granted the motions for summary judgment. Amica now appeals that decision. In reviewing the pertinent law, the Appellate Court states, “[t]he duty to defend does not depend on whether the injured party will successfully maintain a cause of action against the insured but on whether [the complaint] stated facts which bring the injury within the coverage. . . . If an allegation of the complaint falls even possibly within the coverage, then the insurance company must defend the insured.” That being said, an insurer has a duty to defend only if the underlying complaint reasonably alleges an injury that is covered by the policy. The Appellate Court references the claimant’s allegation that her vehicle “sustained collision damage” due to the negligence of the defendant and that the damage to her vehicle required the expense of a considerable sum to repair it. The defendants’ insurance policy provides: “We will pay for damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident. . . . We have no duty to defend any suit or settle any claim for bodily injury or property damage not covered under this policy.” The policy defines “property damage” as “physical injury to, destruction of or loss of use of tangible property.” The Appellate Court holds that a vehicle requiring repair following a collision is one that has been partially destroyed and therefore concludes that “destruction” encompasses both total and partial destruction of tangible property. Therefore, the defendants’ insurance policy obligates Amica to pay damages for both total and partial destruction of a motor vehicle for which its insured is legally responsible following an automobile accident. Under Connecticut law, it is well settled that those damages may include costs to repair a motor vehicle and the diminution of its value. Because an insurer’s duty to defend is triggered if at least one allegation of the complaint falls even possibly within coverage, the Appellate Court need not definitively decide whether the policy provides coverage for the claimant’s diminution in value claim. Instead, the Appellate Court finds that the diminution in value claim may possibly fall within the coverage provided by the policy, triggering Amica’s duty to defend the defendants in the underlying negligence action. Therefore, the Appellate Court affirms the trial court’s partial summary judgment in favor of the insured defendants and the claimant. Amica Mutual Ins. Co. v. Gilleran, 239 Conn. App. 1, 358 A.3d 202 (2026).