How it Works in Georgia

The case that changed the law was State Farm Mutual Automobile Insurance Company vs. Mabry et al. The case was brought against State Farm for breach of contract, when the insurer refused to compensate for diminished value because of an accident. The idea behind the claim was simple: An insurance policy promises to restore the car to its pre-accident condition. And since even an expertly-repaired vehicle is worth less than it was before the accident, the insurance policy should cover the difference.

The court found against State Farm and found that insurance companies had a duty to evaluate and compensate claimants for any loss in value. State Farm pursued the case all the way to the state Supreme Court, which upheld the judgment against State Farm in 2001.

"Before [the case], if your car was going to be worth less after being repaired, you had to go talk to a used car lot, get information and you had to put the case together," says former Georgia Insurance Commissioner John Oxendine. "What the Georgia courts did in 2001 was say ‘that's a high burden to put on the consumer.'"

In December, 2001, Oxendine's office issued a directive to all insurance companies that required them to compensate people for diminished value. Under the directive, companies had a proactive responsibility to consumers – if DV wasn't offered up front as part of a claim, insurance companies would be breaking the law.

A decade later, diminished value is part of the insurance system in Georgia. Under the system, insurance companies have to offer compensation for diminished value, but if a consumer thinks this offer is unfair, they can get an independent appraisal and submit it as part of their claim. A number of specialized appraisal businesses now thrive in the state.

And consumers' greatest fear – that their insurance premiums would go up – haven't happened. "We have not seen any substantial increase in insurance rates," Oxendine says.

"Diminished Value of Georgia" is one of many businesses that have sprung up in Georgia since the law came into effect. Visit their website see how a diminished value appraisal is done in that state.

Read the Supreme Court decision or click here to jump to the Georgia Insurance Commission directive


Georgia Insurance Commission directive