PCI Fights Indiana Diminished Value Car Claim

By Matt Brady, Washington Bureau

NU Online News Service, Oct. 6, 3:35 p.m.EDT?The Indiana Supreme Court should reject a claim forcompensation for the diminished value of a car because of an autoaccident, property-casualty insurance groups are arguing in afriend of the court brief.[@@]

The brief was filed by the Property Casualty InsurersAssociation of America, the Insurance Institute of Indiana andother industry trade groups in Christina Allgood vs. MeridianSecurity Insurance Co.

In the case, Meridian Security is asking the Indiana High Courtto reverse a state Court of Appeals ruling that would allow alawsuit based on the theory of diminished value in automobile crashcases to proceed to trial.

The Court of Appeals held that Meridian's auto insurance policyrequires Meridian to pay not only the cost of repairs, but also anadditional amount for the "diminished value" that damaged vehiclesallegedly may suffer even after
being completely and properly repaired.

The lower court issued the ruling despite the fact thatMeridian's policy language explicitly limits its liability toeither the vehicle's actual cash value or the amount necessary torepair or replace the vehicle's damaged parts with repair parts of"like kind and quality, whichever is less."

In their brief, the trade groups contend that the Court ofAppeals' decision not only creates "unnecessary, cumbersome new lawin Indiana, but also contradicts the strong national trendrejecting
'diminished value' claims."

Diminished value is the
difference between the market value of a car before it has been ina collision and its value after it has been repaired.

"Only 10 states recognize the concept of diminished value, andIndiana shouldn't take that route," said Robert Hurns, PCI counseland legislative database manager.

"There is an overwhelming trend reflected in recent courtdecisions around the nation that diminished value is notrecoverable under policies limiting insurer liability to the costof repairs.

In the past three years, Hurns said, six state supreme courtshave rejected coverage for 'diminished value,' and the "IndianaSupreme Court should do the same."