Indiana Cases Focus on ‘Diminished Value’ Claims

An Indiana resident has filed suit in Federal Court in Indianapolis against his insurance company, alleging that, although his car was repaired after an accident, he was unable to obtain a reasonable price for it, and wants to be compensated for the “diminished value.”

A report in The Indianapolis Star found that four other automobile owners in the state have filed similar claims against Allstate, State Farm and Meridian Security, seeking similar damage awards. They have sought to have the claims declared a class action.

The dispute centers on whether insurers are responsible under the terms of an automobile policy to pay for more than the repairs to a car that’s been in an accident. Consumer groups argue that they are, as a vehicle can lose up to 18 percent of its value after being repaired.

The insurance companies on the other hand maintain that loss in value is not covered by standard automobile policies, and that, if they are required to pay such claims, the costs of insuring vehicles would inevitably have to be increased to pay for the additional amounts they’re required to spend.

Although a court in Georgia ruled last year that insurers are responsible for the amount of diminished value, Indiana courts have so far decided that they are not.

A related dispute centers on the quality of the repairs. The consumer groups have maintained that no matter how well the automobile is put back together after an accident, if it sustained major damage, it will inevitably be worth less. But the insurance companies have pointed out that in many cases repairs, if done properly, actually enhance the car’s value. The Star article quoted the NAII’s John Eager as stating that “Sometimes, I think the quality is even better. You’re really getting a new set of components on the car.”

Topics Auto Claims Indiana