COLUMBIA, S.C. -- The South Carolina Supreme Court will hear arguments Wednesday on whether insurers must compensate policyholders for a vehicle's depreciation after a wreck.
Albert Schulmeyer crashed his pickup truck two years ago and his insurer paid for about $3,000 in repairs. But the Irmo man says State Farm Fire and Casualty Co. still owes him about $1,000 because his truck was worth less after the collision.
"I don't expect anything, but maybe it will change the laws," said Schulmeyer, 61.
Up to 25,000 State Farm insurance claims from 2000 and 2001 could be affected if the high court agrees with Schulmeyer, the insurer said in court papers.
A decision for Schulmeyer "could have tremendous ramifications for insurance companies," said Bruce White, a State Farm spokesman. "It comes back to premium dollars. People will have to pay higher premiums."
At question is whether insurance companies, besides covering repairs, can be required to pay for "diminished value" - the difference between a vehicle's value before and after a crash.
Georgia's Supreme Court required insurance companies to pay the difference in a 2001 ruling. Since 1930, courts in six other states also have supported that position, Schulmeyer's lawyers say.
But, in the last several years, courts in Florida, Tennessee and seven other states have rejected that view, the National Association of Independent Insurers said.
Auto insurers typically pay the lower of either the cash value of the vehicle or the cost of repairs and parts. Most South Carolina policies don't address diminished value, a state insurance official said.
Schulmeyer's lawyers say crashed vehicles often lose value even after repaired to "pre-loss condition," and that insurance policies must cover diminished value if they don't specifically ban it.
Schulmeyer traded his truck six months ago and thinks he didn't get top price because it had been wrecked. He said his insurance policy should cover the loss of value, although he was at fault in the crash.
Schulmeyer sued State Farm last February in Richland County Circuit Court. The lawsuit was transferred to Columbia's federal court. Chief U.S. District Judge Joe Anderson halted the suit to get a ruling from state's Supreme Court about the question of diminished value.
Schulmeyer claims State Farm violated his contract by not paying for the diminished value of his wrecked truck. He wants the company to reimburse him and other affected policyholders during the three years before the filing of his lawsuit.
He also wants the insurer to notify customers about the issue.