diff --git a/.changes/v1.12/BUG FIXES-20250516-114251.yaml b/.changes/v1.12/BUG FIXES-20250516-114251.yaml
new file mode 100644
index 000000000000..2a1252eaf408
--- /dev/null
+++ b/.changes/v1.12/BUG FIXES-20250516-114251.yaml	
@@ -0,0 +1,5 @@
+kind: BUG FIXES
+body: Avoid crash on test failure in comparison in function call
+time: 2025-05-16T11:42:51.289379+01:00
+custom:
+    Issue: "37071"
diff --git a/internal/command/format/diagnostic_test.go b/internal/command/format/diagnostic_test.go
index 0c2137589802..40130e00459b 100644
--- a/internal/command/format/diagnostic_test.go
+++ b/internal/command/format/diagnostic_test.go
@@ -342,6 +342,69 @@ func TestDiagnostic(t *testing.T) {
 [red]│[reset]
 [red]│[reset] LHS not equal to RHS
 [red]╵[reset]
+`,
+		},
+		"error originating from failed wrapped test assertion by function": {
+			&hcl.Diagnostic{
+				Severity: hcl.DiagError,
+				Summary:  "Test assertion failed",
+				Detail:   "Example crash",
+				Subject: &hcl.Range{
+					Filename: "test.tf",
+					Start:    hcl.Pos{Line: 1, Column: 6, Byte: 5},
+					End:      hcl.Pos{Line: 1, Column: 12, Byte: 11},
+				},
+				Expression: &hclsyntax.FunctionCallExpr{
+					Name: "tobool",
+					Args: []hclsyntax.Expression{
+						&hclsyntax.BinaryOpExpr{
+							Op: hclsyntax.OpEqual,
+							LHS: &hclsyntax.LiteralValueExpr{
+								Val: cty.ObjectVal(map[string]cty.Value{
+									"inner": cty.StringVal("str1"),
+									"extra": cty.StringVal("str2"),
+								}),
+							},
+							RHS: &hclsyntax.LiteralValueExpr{
+								Val: cty.ObjectVal(map[string]cty.Value{
+									"inner": cty.StringVal("str11"),
+									"extra": cty.StringVal("str21"),
+								}),
+							},
+							SrcRange: hcl.Range{
+								Filename: "test.tf",
+								Start:    hcl.Pos{Line: 1, Column: 6, Byte: 5},
+								End:      hcl.Pos{Line: 1, Column: 12, Byte: 11},
+							},
+						},
+					},
+				},
+				EvalContext: &hcl.EvalContext{
+					Variables: map[string]cty.Value{},
+					Functions: map[string]function.Function{
+						"tobool": function.New(&function.Spec{
+							Params: []function.Parameter{
+								{
+									Name: "param_0",
+									Type: cty.String,
+								},
+							},
+						}),
+					},
+				},
+				// This is simulating what the test assertion expression
+				// type would generate on evaluation, by implementing the
+				// same interface it uses.
+				Extra: diagnosticCausedByTestFailure{true},
+			},
+			`[red]╷[reset]
+[red]│[reset] [bold][red]Error: [reset][bold]Test assertion failed[reset]
+[red]│[reset]
+[red]│[reset]   on test.tf line 1:
+[red]│[reset]    1: test [underline]source[reset] code
+[red]│[reset]
+[red]│[reset] Example crash
+[red]╵[reset]
 `,
 		},
 	}
diff --git a/internal/command/views/json/diagnostic.go b/internal/command/views/json/diagnostic.go
index 90f8459c23dc..0b8371b92d51 100644
--- a/internal/command/views/json/diagnostic.go
+++ b/internal/command/views/json/diagnostic.go
@@ -446,7 +446,9 @@ func NewDiagnostic(diag tfdiags.Diagnostic, sources map[string][]byte) *Diagnost
 					// If the test assertion is a binary expression, we'll include the human-readable
 					// formatted LHS and RHS values in the diagnostic snippet.
 					diagnostic.Snippet.TestAssertionExpr = formatRunBinaryDiag(ctx, fromExpr.Expression)
-					diagnostic.Snippet.TestAssertionExpr.ShowVerbose = testDiag.IsTestVerboseMode()
+					if diagnostic.Snippet.TestAssertionExpr != nil {
+						diagnostic.Snippet.TestAssertionExpr.ShowVerbose = testDiag.IsTestVerboseMode()
+					}
 				}
 
 			}