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How Do You Calculate Property Damage?

What if someone damages your property; damages to a complex, home, car, boat, or other item? How much will the person owe you if liability is established? Many people mistakenly believe that the proper measure of damages is “replacement cost.” In other words, if someone rips the cushion on your couch, they should have to pay you what it would cost to buy a new couch, right? That might seem fair to you, but it isn’t the law. As a business litigation lawyer, Memphis, TN trusts in proving damages in a wide variety of cases, we understand the specific rules about how to measure damages and we’d like to share some of our knowledge with you.

While every state has its own individual rules about how to measure damages, in many jurisdictions, including Tennessee, the measure of damages for injury to personal property is either:

(a) the cost of repair, or

(b) the difference in the property’s market value immediately before and immediately after the injury.

Which of those two measures is to be applied depends upon the proof presented, primarily as to whether repairs will restore the property to its pre-accident function, appearance and value.

In our damaged couch example, if the cushion can be or has been repaired so as to substantially restore its function, appearance and value, then the reasonable cost of repair is the measure of damages. This might be the case if you’re able to take the cushion to an upholstery shop and have the fabric replaced.

If the cushion has not been so repaired or is not capable of such repair (or if your couch was otherwise damaged beyond repair), then the proper measure of damages is the pre-accident and post-accident difference in fair market value.What is fair market value?  According to the IRS, it is the price that a piece of property would sell for on the open market. It is the price that a fully-informed seller and buyer would agree upon.  In order to seek this measure you must prove both the pre-accident and post-accident values, and you must also prove that the property is not capable of repair that will substantially restore its condition, appearance, and value or that repairs made did not substantially restore them.

As you can see, measuring property damages isn’t always as simple as it may seem on the front end. That’s why you should consult an experienced business litigation lawyer  to help you present your claim correctly.

Thanks to our friends and contributors at Wiseman Bray PLLC who have significant experience in property damage cases.

Traci BidingerHow Do You Calculate Property Damage?