Court rules that insurers must replace luxury with luxury

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An Audi can’t be replaced by just any car, Fred Anderson believes.

Anderson got into a tug of war with Allstate Insurance Co. and sued it following a months-long dispute over how much he was owed for the temporary loss of use of his $60,000 Audi Q7 when a motorist insured by the company crashed into the vehicle in April.

A DeKalb County Magistrate Court judge last week ordered Allstate to pay Anderson $8,200, or $200 for each of the 41 days Anderson’s luxury SUV was being repaired. Allstate’s initial offer was $125.75 to cover a car rental for the five days its claims adjuster said the repairs would take to complete.

“I feel like Allstate was trying to take advantage of me,” said Anderson, who added the company refused his initial offer in May to settle the case for $1,400. “I went through a lot to get this resolved.”

How Anderson, an Atlanta management consultant and fraud examination specialist, won more than 65 times Allstate’s initial offer calls attention to a Georgia statute that addresses how such loss-of-use claims ought to be handled.

The ruling highlights an option that few not-at-fault motorists might realize they have: Georgia courts interpret that statute to mean an at-fault insurance company has to give the other party enough in auto rental coverage to pay for the use of a vehicle equal to the one being repaired. Other states interpret it that way, too.

Last year, Montana’s insurance commissioner sent a memo to all insurers in the state saying loss-of-use damages meant getting enough in rental coverage to get a vehicle similar in value and quality.

Georgia’s statute is a little fuzzy in that it doesn’t concretely define what constitutes a reasonable loss of use, leaving it to the discretion of judge and jury.

For Anderson, 57, reasonable loss of use meant getting Allstate to pay him what it would cost to rent another Audi Q7 in metro Atlanta: $282 per day, or $11,562. Allstate had other ideas, but the magistrate judge, who lowered it to $200 a day, agreed with Anderson’s interpretation.

If more motorists in similar situations to Anderson’s follow his lead and push for rental payments to cover their class of vehicle — be it a $25,000 Honda Accord or a $245,000 Rolls-Royce Ghost — it’s almost a certainty insurers will push state legislators change the statute, said J. Stephen Berry, a partner at McKenna, Long & Aldridge in Atlanta.

“The statute limits recovery in requiring the benefits to be ‘reasonable,’ which could include any number of factors that a judge or jury would like to consider,” said Berry, who specializes in insurance law and is author of “Georgia General Liability Insurance,” which examines the state’s regulations.

“The statute does not specifically address whether plaintiffs are entitled to the rental of a ‘comparable’ car, but Georgia’s courts have interpreted the statute that way.”

Allstate, Georgia’s second-largest auto insurer with policies covering about 600,000 vehicles in the state, would not discuss the case, citing a long-standing policy of not discussing matters in litigation.

An Allstate spokesman said, however, that the company does not have a fixed daily rental amount and that in such cases it offers “reasonable” rental compensation. So in the case where a mom of four driving a minivan loses the use of the minivan following an accident, Allstate will cover her to rent another minivan, though not necessarily one that’s top of the line, Allstate spokesman Shane Robinson said.

“We want our customers to be able to get around and fulfill the functions they could before the damage occurred … within reason,” he said.

What’s reasonable for the owner of a luxury vehicle, he wouldn’t say.

For now, the insurance industry isn’t pushing for a change in the law, said David Colmans, executive director of the Georgia Insurance Information Service, an industry trade group.

“When motorists try to get the most they can possibly get from rental expenses it potentially runs against the notion of trying to fairly price the service,” Colmans said. “The insurers provide pricing for rental allowances that goes into the overall insurance rate that’s developed. If you have a situation where motorists are trying to get the maximum amount they can for a rental, eventually the upward pressure is going to affect rates.”

One case likely won’t mean insurers will pressure state legislators to make the law more explicit, said Berry, the insurance lawyer. “They will monitor rulings to see if plaintiffs start to take advantage of the statute more than they used to.”

If the industry lobbies legislators to change the law, it won’t necessarily be good for consumers, Berry said.

“In the past five or six years, the Georgia Legislature and the Supreme Court have been pro-business and pro-insurance company as opposed to the five years prior to that,” he said.

Anderson said he didn’t start out wanting to sue Allstate. But the company’s explanations for why he wasn’t entitled to a vehicle of equal value didn’t add up to him, he said. “Allstate kept saying ‘all we have to do is provide reasonable transportation,’ ” he said. “I said show me case law and I’ll consider it.”

Anderson said he wasn’t trying to get more than he was owed.

“The main reason I put a lot of time and effort into this is I feel I can serve a lot of people with this and that they can learn and take the benefit,” he said. “I’m not being greedy. This is what I’m entitled to.”

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