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DIMINISHED VALUE CONSIDERED IN TX

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The National Association of Independent Insurers (NAII) is urging the Texas Supreme Court to review and overturn a lower court ruling requiring personal automobile insurers to pay diminished value under the terms of an insurance policy. In the case of American Manufacturers Mutual Insurance Co., et al v. Schaefer, Gary Schaefer filed a class action lawsuit against several insurance companies seeking a ruling that personal auto policies cover diminished value. The district court granted summary judgment in favor of the insurer, but the Court of Appeals for the Ninth Judicial District reversed that decision. The insurer is seeking review of that appellate court ruling by the Texas Supreme Court. A spokesperson for the NAII asserted that “the unambiguous policy language and the overwhelming trend reflected in recent court decisions around the nation that diminished value is not recoverable under policies limiting insurer liability to the cost of repairs” present a strong argument for overturning the case. The NAII said the Court of Appeals ignored a 2000 ruling by the Texas Department of Insurance (TDI) confirming that automobile insurance policies do not obligate insurers to pay for diminished value when the vehicle has been repaired to its pre-damaged condition. The association noted that by ignoring TDI’s position, the appeals court undermined insurance regulation in the state. Courts in Maine, Delaware, Florida, Alabama, Louisiana, Missouri, and Wisconsin have found that diminished value is not recoverable.


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