On December 1, 2008, the Georgia Department of Insurance issued a Directive which stated that the ruling commonly known as the 17C Rule, is not an endorsed method for the calculation of diminished value and that insurers should cease any reference which may imply that the Department has endorsed this particular method.
The 17C Rule came about on November 28, 2001, when the Georgia Supreme Court issued a ruling in the case of State Farm Mutual Automobile Insurance Company v. Mabry.
This court ruling stated that physical damage resulting from a covered event can reduce the value of a vehicle, even if repairs return it to it’s pre-loss condition.. The Court determined that the insurance company involved in the case is obligated to assess diminution of value “…along with the elements of physical damage when a policyholder make a general claim of loss.”
The Mabry case was a class action lawsuit involving more than 25,000 insurance claims. In order to compensate claimants under this lawsuit, the court agreed to the temporary use of a generic formula. In paragraph 17 section “c” of its ruling, the court indicated this fact.
It is not hard to understand why a simple formula was used in this case. Obviously because of the large number of vehicles involved and the difficulty in having an actual appraiser assess the market value and the post-wreck amount in comparison to the pre-accident value.
In the 2008 Directive, the Department of Insurance reiterated the fact that this calculation method was used specifically for the Mabry case and that case only due to unique circumstances.
There are a number of companies in the industry that use the 17C calculation method but call it something else. Our Diminished Value Report does not and it will stand up in court.
Georgia Directive
