PCI Comments on Allstate Class Action Verdict

The Property Casualty Insurers Association of America has issued a comment on the verdict handed down by an Illinois jury in a class action case, which concluded that Allstate Insurance Co. does not have to pay over $300 million for the diminished value of policyholder vehicles that had been damaged in accidents (See IJ Website May 3).

“In several lawsuits over recent years, juries have rejected diminished value as a flawed and unreasonable concept,” stated John Lobert, PCI senior vice president of state legislative affairs. “This verdict is just the latest opportunity for informed jurors to reject attempts by plaintiffs’ lawyers to pervert the plain language of the insurance contract.”

The PCI noted that it had taken the jury less than four hours to conclude that the plaintiffs should receive repair payments only. The original lawsuit was brought by an East St. Louis, Illinois couple whose Toyota pickup truck was damaged in two separate accidents. Allstate paid about $3,000 for the repairs, but the couple argued they and others were entitled to the difference in the value of their vehicle before damage and after repair.

“Besides questioning the concept of diminished value, which is clearly not covered under the collision and comprehensive coverage of the standard auto insurance policy, insurers question the ability of plaintiffs to bring a multi-state class-action lawsuit in an issue that should be determined by insurance regulators and courts in individual states,” said the bulletin.

“We remain disappointed that unfounded claims such as this are allowed to be brought as class actions that circumvent the clear regulatory system that state legislatures around the nation have put in place and support with taxpayer dollars,” Lobert concluded