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Letter to the Editor

State Farm Settles Diminished Value Auto Suit in Georgia

BLOOMINGTON, Ill. -- According to an A.M. Best report, State Farm Insurance has agreed to settle a class-action suit in Georgia in which it will reimburse motorists for the alleged diminished value of vehicles repaired after collisions. The settlement followed a ruling in November in favor of plaintiffs by the state's highest court.

Under the settlement, State Farm will provide $100 million to as many as 700,000 Georgia policyholders to cover diminished car values in accident claims filed since December 1993 and $50 million for court costs and attorney fees. The company has also agreed to pay as much as $100 million for diminished values in future claims over the next six years.

State Farm Spokesman Phil Supple said the company intends to comply with the law in Georgia, though it has long maintained that proper repairs return a car to its pre-loss condition. "Diminished value occurs rarely when a car is properly repaired," he said. But he added that the company approaches this issue on a state-by-state basis. "I can't say where State Farm stands legally in other states where diminished value applies," he said. At least three other states--Mississippi, South Carolina and Tennessee--have diminished-value requirements. Supreme courts in Delaware and Vermont have rejected the concept of diminished value, he added.

The Supreme Court of Georgia denied State Farm's appeal of a Dec. 1, 2000 ruling by a Georgia Superior Court judge, as reported in Bestwire. The Supreme Court at that time also affirmed the class-action status of the lawsuit that had been granted by Muscogee County Superior Court Judge Douglas Pullen in the suit, Mabry vs. State Farm.

State Farm had a 24.5 percent market share in 2000 in Georgia, according to A.M. Best Co. State/Line reports. Allstate Insurance Co. ranked second with a 9.6 percent share, while Georgia Farm Bureau Mutual Insurance Co. was third with a 5.3 percent share.

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