The National Association of Independent Insurers (NAII) is challenging
the decision in a diminished value (DV) class action lawsuit that favors
the plaintiffs.The NAII filed an amicus brief Oct. 10 with the Louisiana First Circuit
Court of Appeals, asking the court to overturn its Feb. 25 decision in the
Billy Campbell et al. vs. Markel American Insurance Co. lawsuit.The ruling, issued by the Twenty Third Judicial District Court of
Louisiana, was in the plaintiffs' favor. The lawsuit was originally filed
Aug. 10, 1999, and on Dec. 15, 1999, Markel moved for summary judgment.
The court denied Markel's motion and granted Campbell's cross motion for
partial summary judgment. Markel filed an appeal March 29.In a statement about the decision to dispute the ruling, NAII associate
counsel Laura Kotelman says, "We strongly urge the Court of Appeals
to reverse this decision and find as every other Louisiana district and
city court has, that insurance companies are required to pay for the cost
to return the damaged vehicle to its pre-accident condition, not for
diminished value. Our brief argues that Louisiana law requires that the
court enforce the plain language of the insurance contract, which limits
liability to the cost to repair the vehicle. The First District Court
recently rejected the exact same arguments advanced by Campbell, and the
Court of Appeals should, too."The National Association of Independent Insurers (NAII) has also filed
a friend of court brief in a separate DV case, Emelda Johnson vs. Illinois
National Insurance Co., but in favor of the court's ruling. The brief,
filed Oct. 25, supports the decision made by Louisiana's Nineteenth
Judicial Court that an insurance company is not obligated to pay an
insured for a vehicle's loss of value following an accident and urges the
Louisiana Court of Appeals to affirm the trial court's ruling.But the Coalition for Collision Repair Excellence (CCRE) disputes the
NAII's suggestion that DV claims aren't valid. "The CCRE supports the
notion that loss of market value from diminution of value exists at the
time the automobile property is damaged and is part of the total amount of
the loss incurred," says Mark Cobb, CCRE president and chief
operating officer (COO).Cobb, who is also the owner of Cobb's Collision Center in Windham,
Maine, says that the laws for third-party claims, which are ruled by tort
law, clearly establish that the person causing damage owes for the loss,
including DV.In first-party claims, the car owner's insurance company is responsible
for coverage. These claims are guided by the terms contained in the
insurance policy in accordance with contract law. Third-party claims
differ in that the claimant does not have a policy with the paying
insurance company."Interpretation of policy language on first party claims by the
state's courts will ultimately determine an insurer's liability for DV,"
Cobb says. Despite the NAII's assertion that several states have thrown
out DV cases, nearly all of these cases are first-party issues, which may
have been ruled invalid for numerous reasons-including technical issues,
he says.Patrick J. McGuire, owner of the law office of Patrick J. McGuire P.C.
in Chicago, specializes in DV lawsuits. He says assuming that a vehicle is
properly repaired to its pre-accident condition, the majority of courts
will not rule in favor of a first party claimant."Most courts say DV is not covered in first party claims because
it would essentially be turning all policies into stated value
policies," McGuire says. A stated value policy is one in which both
parties-the insurer and insured-agree when the policy is purchased how
much the vehicle would be worth in the case of a total or partial loss."However, if a car is not restored to pre-accident condition as
far as repairs go, [the insured] may very well be covered on a first-party
claim," he says.Mark Pierson, co-owner of Princeton Auto Body in Princeton, Ill., deals
with DV cases regularly. In third-party cases, he believes, the insurer of
the person causing the accident is liable for DV.But a DV claim in first-party cases depends on the circumstances, the
company and how the contract reads. "Is it DV because of bad repairs
from a shop or because of the accident itself?" he asks. If there is
a loss in value because of shoddy repairs, then a DV claim is viable. But
some people believe they are always entitled to reparations.Bob Redding, lobbyist for the Automotive Service Association
(ASA),
says DV is "a valid concern," but it should be determined on a
case-by-case basis. To determine if a DV claim is legitimate, he says,
consider the perception of the vehicle's value and the quality of the
repair work.
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