Ind. High Court Rules Against Diminution of Value

The Indiana Supreme Court today ruled that insurance policies are not obligated to compensate damaged property for decline in value of the property after adequate repairs have been made. The insurance industry views the ruling as a major clarification of the ambiguity and confusion that has surrounded the diminished value issue for years.

The Insurance Institute of Indiana participated in the case by submitting an amicus brief, arguing that policy langauge clearly states that diminished value is not included as a “loss.”

The class-action suit, Allgood v. Meridian Security Insurance Company, was brought by a policyholder who claimed Meridian Insurance should have reimbursed her for the decline of value of her repaired car as a result of it having been damaged. The trial court ruled in favor of the insurance company, but the Indiana Court of Appeals reversed the decision.

The Indiana Supreme Court denied transfer on Oct. 27, finding “that an insurance policy that provides coverage for loss limited to the lesser of the actual cash value or the amount necessary to repair or replace the property with other property of like kind and quality does not obligate the insurer to compensate for diminution in value of the property after adequate repairs have been made.”

All five justices voted to deny transfer of the case.

Topics Legislation Property