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By Caroline Holland
Court Rules in Residual Diminished Value Case
The insurer argued that the vehicle owner is owed nothing due to the difficulty in comparison speculation between the market value of the repaired car and the market value of a similar vehicle that was never damaged. Furthermore, the insurers argued that the plaintiff was attempting to recover both the cost of repair and the diminution in value. The court disagreed, again making the distinction between "gross diminished value" and "residual diminished value." According to the court decision, "unlike the gross diminution in value that Ohio courts have recognized as the preferred method of calculating damages to a motor vehicle, the residual diminution in value, realized because of a vehicle's involvement in a collision, does not overlap the cost of repairs."
Democrats, GOP Debate Insurance Bill
Though Republicans did not voice their support for the bill, some Florida Republicans applauded the attempt to address ever-increasing premiums. However, some Republicans still believe the bill could leave constituents footing the bill for natural disasters. Responding to this claim, Democrats argue that a federal backstop is needed because insurance companies cannot do the job on their own.
Legislation Would Help Smaller Insurance Firms
This bill, under Section 831(b) of the Internal Revenue Code, would increase the investment income election threshold from the current $1.2 million to $1.971 million, and provide for annual indexation to account for future inflation. Currently, under Section 831(b) of the code, small insurance companies can elect to be taxed only on investment income. This election can occur if the greater or net or direct written premiums for the year are between $350,000 and $1.2 million. This election level was last set in 1986.
The texts of House Bill 3355 and U.S. Senate Bill 2040 are available on the Automotive Service Association's legislative Web site, www.TakingTheHill.com.
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Copyright (c) 1996-2011. Automotive Service Association®. All rights reserved.
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The Ohio 10th District Court of Appeals ruled 3-0 in the case of Rakich v. Anthem Blue Cross Blue Shield that claimants may recover the diminished value to their car after it has been repaired. The court distinguished between diminished value, defined as the difference between the pre- and post-accident value, and "residual diminution in value," defined as the difference between pre-accident and post-repair values. Prior courts have ruled that a plaintiff may recover either the repair cost of the vehicle or the diminished value of the vehicle in the event of a total loss. However, the Ohio District Court found that there are some cases where the traditional "either or" phrase may not make the claimant whole.
