Following our analysis of the former Intercompany Claims Agreement and the new Direct Compensation for Property Damage Regulation, Alta Reg 132/2021 (“DCPD”) published on August 30, 2021, there was little to no case law referring to the DCPC or section 585.1 of the Insurance Act, RSA 2000, c I-3 (“Act”). The recent case Hupper v. Howatt, 2024 ABCJ 141 may be the first published decision referring to section 585.1 of the Act and the DCPD. In addition, Hupper v. Howatt discusses a legal topic, which until now had remained very quiet, namely, the diminished value or accelerated depreciation claim. In Hupper v. Howatt, the Plaintiff tried to revive the additional damage to his rare collector vehicle consisting of residual diminished value or accelerated depreciation. We will argue that the legitimacy of diminished value claims has been a very contentious claim in the insurance industry. Plaintiffs have tried to advance arguments based on similar diminished value claims made, for instance, in the USA. Some of these arguments have failed, yet these claims remained alive. However, we will argue that the validity of these diminished value claims has remained anything but clear. Upon conducting a brief historical review of these diminished value court cases, one may argue that the accelerated depreciation is a legitimate claim that vehicle owners may advance. However, the quantification of these claims is complex and mostly unclear to ascertain accurately. To illustrate the level of complexity, some cases have noted that there is no inherent depreciated value. Rather, the Plaintiff has the burden of proof. The method by which these claims are to be quantified is dependent on the circumstances. There is no requirement for a vehicle appraiser to conduct these valuations. The opinion of an economist may or may not be necessary to ascertain the depreciated value of a vehicle The award may be a pecuniary damage award, but not necessarily. Again, the outcomes of these cases seem to be highly dependent on the specific circumstances of each case. We hope that the reader will be persuaded to endorse the premise that diminished value claims are some of the most contentious and unpredictable claims to advance and defend. This short commentary will contend that the legitimacy and quantification of these depreciated value claims have remained in life support, but the quantification of these claims is complex and unpredictable. Section 585.1 of the Insurance Act (the “Act”) and the Direct Compensation for Property Damage Regulation (“DCPD”). The relevant amendments to the Act were set out in the Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020, SA 2020, c 36 and came into force on January 1, 2022. Amongst other things, section 585.1 of the Act states that insureds can only recover damages from their own insurance company. Also, there is no longer a right of subrogation against any person In other words, whether you are at-fault, or not at-fault for an accident, as determined under the terms of the DCPD, you must make your collision or property damage claim with your own insurance company. Further, you and your insurance company cannot pursue recovery of the property damage sustained by your vehicle. The court in Hupper v. Howatt reviewed section 585.1 of the Act in detail and acknowledged these changes. As a result, the Court agreed that the Plaintiff was barred from bringing his claim against the at-fault insurance company. The court summarily dismissed the Plaintiff’s action. As a such, the court did not need to rule on the validity of the diminished value claim. Is the Diminished Value or accelerated depreciation claim alive, in life support, or in a figurative state of a comma? There was no in-depth discussion in Hupper v. Howatt as to whether the diminished value claims survived the amendments brought under section 585.1 of the Act, and the DCPD. There was no need for this discussion. Therefore, we will offer our opinion, as follows: Following the amendments brought under section 585.1 and the comments made by the Court in Hupper v. Howatt, although not directly related to these types of claims, the diminished value claims are now in a figurative state of a comma. First, only the not at-fault driver would be able to bring the diminished value claim. The SPF-1 does not entitle the insured person to bring the diminished value claim. The SPF-1 is required to pay actual cash value. Under limited circumstances, an insurer may pay replacement cost value is there is such an endorsement in force. Second, the not at-fault party is now required to bring their claim to their own insurer only. Third, the insurer is required to deal with their own insured, as their own insurer, or as if it were their third-party insurer. Indeed, the insurance company is now required to play two distinct roles. Fourth, if a dispute over quantum arises, which we will argue includes the allegation of a diminished value, this dispute must be resolved with the insured’s own insurer in accordance with the dispute resolution process, which is contemplated under section 519 of the Act. This process is mandatory. What if the insured person is not at-fault driver and argues that the terms of their own automobile insurance policy should not apply to them when not at-fault, and when making a diminished value claim? Section 585.1(3) specifically refers to “damages”. The diminished value claim purports to claim “damages.” Therefore, we contend that the terms of the SPF-1 still apply to insureds whether at-fault or not at-fault. In other words, whether the insured is at-fault or not at-fault for an accident, in case of a dispute over the quantum of the damages sustained by the automobile, both the insurer and the insured are required to resolve the dispute using the Dispute Resolution Process pursuant to section 519 of the Act. This is a mandatory process. Whether or not the diminished value claim survives the dispute resolution process is yet to be seen. To learn more about the implications of Hupper v. Howatt or other insurance matters, please reach out to a member of our Insurance team.