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diminution in value (property)

Diminution in value (property) is a measure of the loss of use of property that has not been physically injured but that is less marketable because of the presence in it of a known defect.

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For example, a building constructed with substandard materials that have not yet shown any physical damage but are certain to do so over time sustains a diminution in value. One purpose of the commercial general liability (CGL) "impaired property" exclusion is to eliminate coverage of diminution-in-value claims.

Related Terms

Under commercial general liability (CGL) coverage, impaired property has sustained loss of use...