Georgia diminished value law

Georgia courts have held that the proper measure of damages in a third-party vehicle damage case includes both repair costs and the vehicle’s diminished value. This principle is supported by Perma Ad Ideas of AM, Inc. v. Mayville, 158 Ga. App. 707 (1981), which confirmed that compensation can include the cost of repairs and permanent impairment in value, provided the total does not exceed the vehicle’s pre-accident value.

Key Statutes: O.C.G.A. 33-4-6 and O.C.G.A. 33-4-7
These statutes require insurers to fairly handle and promptly settle diminished value claims. Insurers must investigate and evaluate such claims in good faith, or risk additional penalties of up to 50% of the claim amount or $5,000 (whichever is greater), plus attorney fees.

Important Case Law:
State Farm Mutual Insurance Co. v. Mabry, 556 S.E.2d 114 (Ga. 2001)
Supreme Court of Georgia
Filed: 2001
Precedential status: Precedential
This decision confirmed that insurance companies must evaluate all damage elements, including diminished value, and develop a suitable methodology to do so.

The 17c Formula Controversy:
The 17c formula, created for use in Mabry to manage a large volume of claims, has since been widely adopted by insurers to cap diminished value payouts. However, the Georgia Insurance Commissioner issued a directive clarifying that the Department does not endorse the 17c formula. The directive warns against misrepresenting it as an approved or definitive valuation method.

The Department emphasized that it has never issued or approved any specific formula for determining diminished value and warned insurers against implying otherwise.