Insurer To Appeal Diminished Value Case

The argument that the insurer intends to make to the high court is that the language of the insurance policy in question "is unambiguous and does not provide coverage for diminution in value." Indiana's highest court has the authority, like that of the U.S. Supreme Court, to determine which cases it will hear. (In an Aug. 6 article on the NU Online News Service, it was incorrectly stated that the Court of Appeals is the state's highest court. That court rejected a petition for rehearing of the Allgood case Aug. 4.)

Although the plaintiff in the case, Christina Allgood, is seeking to have the suit classified as a class action, such a designation has not yet been granted by the trial court. The trial court had decided to dismiss the case for failure to state a claim for which relief could be granted under the theory of diminished value. That decision was reversed by the Court of Appeals.

In denying the petition for rehearing before the Court of Appeals, the court rejected the argument of Meridian Security and industry trade groups.

"Although we acknowledge a potential for dispute in collision damage claims currently pending, we believe that a probable, practical consequence of our decision is that insurers will now include an additional exclusion in their policies?one which specifically states that the insurer will not pay for diminution in value."

By contrast, Meridian Security believes, as stated by a senior judge who dissented in the 2-1 opinion, that "a reasonable insured would understand that an insurer was required by contract to 'repair' his or her vehicle by paying someone in the car repair business to fix the tangible, physical damage to the vehicle."

The dissenting judge added, "A reasonable insured would not understand 'repair' to include 'fixing' the intangible value caused by the market for 'wrecked but repaired' vehicles."