INSURANCE COVERS REPAIRS, NOT VALUE:

October 3, 2005

Siding with a majority of courts in other states, the South Dakota Supreme Court last month ruled unanimously that auto insurers cannot be forced to pay policyholders for the lost market value of wrecked vehicles that have been repaired.

The ruling in a pending lawsuit reverses Circuit Judge Jon Erickson of Huron, S.D., who decided last year that jurors must determine whether Nancy Turbak and Patrick Culhane of Watertown should be compensated for the diminished market value of their car.

Turbak was driving a 2001 Audi Quattro that blew a tire and struck a guardrail in 2003. Western National Mutual Insurance Co. of Edina, Minn., sent the couple a check for $12,459 to repair the car.

The couple demanded that Western National pay them another $10,000 because the car, even after repair, would worth less than similar vehicles never wrecked.

In their lawsuit against Western National, the couple argued that their insurance policy obligated the firm to provide payment for the lost value of the 2001 vehicle.

Ruling in favor of Western National, the high court said the firm’s liability extended only to the lesser of the actual cash value of the wrecked car or the amount necessary to repair it, and any lost market value is not covered by the standard insurance policy.

Although the justices agreed that wrecked cars that have been repaired may be worth less than identical cars that have never been damaged, they said the language of the insurance policy does not provide that contractual coverage.

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