Court Addresses Damages Under Homeowners Insurance Policy

During a storm, a tree landed on a homeowners house causing damage to the home’s foundation.  Homeowners filed a claim on their homeowners insurance policy to recover the resulting damages.  After homeowners and insurance company could not come to an agreement on value of the loss, homeowners filed a lawsuit.  

Homeowners presented the testimony of a contractor as an expert witness regarding the damage and the resulting loss of value.  Contractor testified that the home value was reduced in half as a direct result of the damage to the home’s foundation.  Insurance company sought to exclude the contractor’s testimony, arguing he was not qualified as an expert and did not apply appropriate methodology to reach his opinions.  

The trial court agreed with the insurance company and excluded the testimony of the contractor.  Homeowners appealed to the Georgia Court of Appeals. The Court of Appeals agreed that contractor did not use appropriate methodology to present expert opinion as to diminution in value.  However, the trial court erred in excluding contractor’s testimony as a lay witness.  The court explained that under O.C.G.A. § 24-7-701(b), lay witness testimony is permitted concerning value.  In other words, one need not be an expert to give an opinion on the value or demonization in value.

Under O.C.G.A. § 24-7-701(a), lay witness testimony is permitted if it is rationally based on the perception of the witness; helpful to the determination of a fact in issue; and not based on scientific, technical, or other specialized knowledge requiring expert testimony.  With respect to lay testimony of value, the court agreed that the witness need not be an expert or dealer to form a reasonable opinion.  

The court concluded that contractor’s lay option was admissible based on a number of factors.  These included, for example, the contractor was licensed, he had experience in home building and remodeling, he had constructed and repaired many homes, he was familiar with the cost of construction and the valuation of homes based on his professional experience, he reviewed the specific damage in this case, he witnessed the structural damage in damage to the slab foundation, he witnessed the impact of such damage to the structural integrity of the house, he was familiar with the impact of structural damage to the value of a home, and other important factors.

In short, the court agreed with the insurance company that the contractor could not testify as an expert on the value of the home.  However, based on his experience and observations, he was well suited to testify as a lay witness.  As a result, trial court should have allowed the contractor to present evidence about the diminution in value of the home. 

NOTE: This opinion is subject to the physical precedent rule.  Georgia Court of Appeals Rule 33.2.