A homeowner's carrier has a duty to assess the value that homeowners lose because of physical damage to their homes, even if their homes are repaired. In Thompson v. State Farm Fire & Cas. Co., No. 5:14-CV-32 (MTT), 2016 WL 951537 (M.D. Ga. March 9, 2016), the District Court certified a class of Georgia homeowners who are alleging a claim that State Farm, their homeowner's carrier, did not assess the value lost in their homes. The lead plaintiffs in particular successfully presented a claim for water damage after pipe burst in their home. State Farm paid for repair of the damage under their homeowner's policy. They were told by State Farm, however, that their policy did not cover "diminished value." Their policy was allegedly the carrier's standard contract, common to the members of the Georgia class, and State Farm takes the position that its standard homeowner's policy simply does not cover diminished value.
Parenthetically, on the same record the Court in that case declined to certify another class consisting of Georgia homeowners pursuing a claim that State Farm had a duty to pay their lost value claims. The Court determined that such a class of homeowners would require individualized damage determinations, and so no class could be certified on the duty to pay claims. The duty to assess claims were certified, in contrast, because they present common claims under the same contract for alleged failure of a duty to investigate or assess diminished value.
This may not be as significant a decision as it sounds. The Court in this case pointed out that in other class action lawsuits other "insurers have admitted their policies cover diminished value." Thompson v. State Farm Fire & Cas. Co., No. 5:14-CV-32 (MTT), 2016 WL 951537, at *8 n.5 (M.D. Ga. March 9, 2016).
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements). See in particular id. Volume 2, § 9:5, "The question of bad faith--Presence or absence of fault" and surrounding sections in which first-party insurance coverage determinations, investigations and "assessments" are discussed at length. All rights reserved.
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