In overturning a lower court ruling, the Texas Supreme Court has ruled that insurance contracts do not require an insurer to pay a
policyholder for the vehicle‘s so-called diminished value.
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 Texas Supreme Court correctly ruled that the contract language is clear-cut and does not require the payment for diminished value when a vehicle has been fully and adequately repaired," said Donald Hanson, southwestern regional manager for the National Association of Independent Insurers (NAII).
