NO DIMINISHED VALUE IN TEXAS:

The Texas Supreme Court overturned a lower court ruling and found that insurance contracts do not require an insurer to pay a policyholder for the vehicle’s so-called diminished value. According to the National Association of Independent Insurers, the Supreme Court made the ruling in the case of American Manufacturers Mutual Insurance Co., et al v. Schaefer. In that case Gary Schaefer filed a class action lawsuit against several insurance companies seeking a ruling that personal auto policies cover diminished value. The NAII said a district court granted summary judgment in favor of the insurer, but the Court of Appeals for the Ninth Judicial District reversed that decision. However the Texas Supreme Court noted that to expand the ordinary meaning of repair to include an intangible, diminished value element would ignore the policy’s language or give the contract’s text a meaning it never intended. In addition, the court took into account arguments advanced in an amicus brief filed by NAII that cited the Texas Department of Insurance bulletin as well as numerous other court decisions that state an insurer is not obligated to pay for diminished value. The NAII pointed out that in the last few years there have been numerous court decisions supporting insurers on the issue of diminished value. State supreme and appellate courts in Alabama, Delaware, Florida, Louisiana, Maine, Missouri, South Carolina and Wisconsin have recently addressed the issue and ruled that diminished value is not recoverable.

Topics Texas