Damage To Your Automobile

Here is some basic information about automobile policy coverage for damage to your insured vehicle.

Under this portion of an auto policy the limit of liability to the insurer is the lesser of:  1)  the actual case value of the stolen or damaged property, 2)  the amount necessary to repair or replace the property with like, kind, and quality, 3)  the amount stated in the declarations of the policy.

The terms “repair” and “replace” mean restoring the auto to essentially the same condition as it was in immediately before the damage.  This is discussed in the 1969, Corpus Christi Court of Appeals opinion, Northwestern National Insurance Co. v. Cope and the 1998, Austin Court of Appeals opinion, Great Texas County Mutual Insurance Co. v. Lewis.

If a vehicle is repairable, the insured is entitled to no more than what it would cost to repair the property, as stated in the 1968, Tyler Court of Appeals opinion, Agricultural Workers Mutual Automobile Insurance Co. v. Dawson.

This presumes the vehicle has been restored to essentially the same condition that it was in before the loss.  But if, after repair, the vehicle has not been restored to the same condition as it was in immediately before the loss, the owner may be entitled to recover for diminution in value without necessarily showing the repairs were inadequate.

If the insured is entitled to receive replacement cost coverage, if is the insured’s responsibility to submit receipts once the work is completed in order to receive the replacement cost benefits.

According to the 2003, Texas Supreme Court in the opinion, American Manufacturers Mutual Insurance Co. v. Schaefer, if an insurer repairs a vehicle, it must use parts of “like kind and quality.”  Likewise, a replacement vehicle must be of “like kind and quality.”

“Like kind and quality” permits the insurer to deduct for betterment or depreciation.  The 1998, Austin Court of Appeals in Great Texas County Mutual Insurance Co. v. Queen Insurance Co., explained, “Like kind and quality refers to parts fit for their intended purpose rather than parts similar in age, condition or value to the parts damaged.