FOR PUBLICATION


ATTORNEYS FOR APPELLANT:    ATTORNEYS FOR APPELLEE:

IRWIN B. LEVIN    BRENT W. HUBER
SCOTT D. GILCHRIST    ROBERT L. GAUSS
ERIC S. PAVLACK    BRIAN J. PAUL
Cohen & Malad, LLP    Ice Miller
Indianapolis, Indiana     Indianapolis, Indiana

JAMES KELLER    
Keller & Keller
Indianapolis, Indiana

JAMES H. YOUNG
Young & Young
Indianapolis, Indiana     

     IN THE COURT OF APPEALS OF INDIANA

CHRISTINA M. ALLGOOD,                   )    

individually and on behalf of all others     )
similarly situated,                          )
                                             )
Appellant-Plaintiff,                         )
                                             )
vs.                                          )    No. 49A02-0307-CV-580
                                             )
MERIDIAN SECURITY INSURANCE                  )
COMPANY.                                     )
                                             )
Appellee-Defendant.                          )

    APPEAL FROM THE MARION SUPERIOR COURT
    The Honorable David Dreyer, Judge
    Cause No. 49D10-0301-PL-000171

    April 28, 2004

    OPINION - FOR PUBLICATION

ROBB, Judge

    Christina Allgood appeals from the trial court’s dismissal of her class action lawsuit against Meridian Security Insurance Company and denial of her own motion for partial summary judgment. We reverse.

Whether the trial court properly denied her motion for partial summary judgment which sought judgment as a matter of law that Meridian had a duty to compensate her for the inherent diminution in value of her automobile which remained after repairs had been made.

Appellant’s Appendix at 100, 103.
    Allgood’s vehicle was damaged on June 6, 2001. Meridian paid the cost of repairs to her vehicle, but did not pay for any diminution in value over and above the cost of repair. Allgood initiated a class action lawsuit seeking damages against Meridian for its failure to pay for the diminished value of its insureds’ vehicles and injunctive relief in the form of a declaration that diminution in value was covered under the policy. Meridian filed a Trial Rule 12(B)(6) motion to dismiss and/or Trial Rule 12(C) motion for judgment on the pleadings. Allgood filed a response and a motion for partial summary judgment. After a hearing, the trial court entered an order denying Allgood’s motion for partial summary judgment and granting Meridian’s motion to dismiss, finding that the policy did not cover diminished value as a matter of law. Allgood now appeals.

Id. at 118. The court examined seventy-five years of Georgia case law dealing with an insurer’s obligation to pay for diminution in value, beginning with U.S. Fidelity & Guaranty Co. v. Corbett, 134 S.E. 336, 338 (Ga. Ct. App. 1926), which held that the undertaking to insure against “actual loss or damage” is the primary obligation, pursuant to which the measure of liability is the difference between the value of the property immediately before and immediately after the loss, and the limitation of liability provision is subordinate, serving to abate the primary liability. The effect of a limitation of liability clause was clarified in Simmons v. State Farm Mut. Auto. Ins. Co., 143 S.E.2d 55, 57 (Ga. Ct. App. 1965), which noted the insurer’s options for paying for the loss under the clause, but also noted that “no matter which alternative is chosen, the market value of the property . . . after payment must equal the market value before the loss.” Subsequently, in State Farm Mut. Auto. Ins. Co. v. Smith, 167 S.E.2d 610, 611-12 (Ga. Ct. App. 1969), the Georgia Court of Appeals reiterated that if the insurer elects to repair the vehicle, its obligation is to restore to the insured the previous value of the vehicle, not just the previous condition, noting that the “insured must be made whole, except for any deductible, under any option.” And U.S. Fire Ins. Co. v. Welch, 294 S.E.2d 713 (Ga. Ct. App. 1982) held that “repair” as used in the limitation of liability provision did not mean “any repair,” it meant “restoration . . . to substantially the same condition and value as existed before the damage occurred.” The Georgia Supreme Court summarized the state’s history on this matter as follows:
[V]alue, not condition, is the baseline for the measure of damages in a claim under an automobile insurance policy in which the insurer undertakes to pay for the insured’s loss from a covered event, and . . . a limitation of liability provision affording the insurer an option to repair serves only to abate, not eliminate, the insurer’s liability for the difference between pre-loss value and post-loss value.

556 S.E.2d at 121. Finally, the court noted that “the insurance policy, drafted by the insurer, promises to pay for the insured’s loss; what is lost when physical damage occurs is both utility and value; therefore, the insurer’s obligation to pay for the loss includes paying for any lost value.” Id. at 122. The court noted that this result reflected “economic reality.” Id.
    Conversely, in Siegle v. Progressive Consumers Ins. Co., 819 So.2d 732 (Fla. 2002), the Florida Supreme Court held that the insurer was not obligated to pay for the diminished value of a satisfactorily repaired vehicle. The policy at issue therein provided that it would pay for loss to an insured auto caused by collision in money or repair or replacement of the damaged property in like kind and quality. There was a “limit of liability” provision which provided that the insurer’s limit of liability would not exceed the lesser of the actual cash value of the vehicle, the amount necessary to repair or replace with like kind and quality, or the amount shown on the declarations page. The insurer opted to repair the insured’s vehicle following a collision, and despite being satisfied with the repairs, the insured initiated a lawsuit for breach of contract against the insurer seeking recovery of the inherent diminished value of her vehicle due to the collision. The trial court dismissed her complaint. The insured contended that the policy was ambiguous in that it failed to define several key terms. The Florida Supreme Court disagreed, holding that the policy was unambiguous, that the insurer’s obligation was only to return the vehicle to substantially the same condition as before the loss, and that therefore, diminished value was not a loss covered by the policy. Id. at 739.
    In Florida, insurance contracts are construed in accordance with the plain language of the policies.

Id. The court also noted a “nationwide split of authority” regarding this issue. Id. at 738.

Estate of Eberhard v. Illinois Founders Ins. Co., 742 N.E.2d 1, 2 (Ind. Ct. App. 2000) (citations omitted). We make every attempt to construe the language in a contract so as not to render any words, phrases, or terms ineffective or meaningless. Id. at 3.
    After due consideration of the cases cited by the parties as to this issue, we agree with those jurisdictions which have held the insurer responsible under similar policies for restoring value as well as condition to the insured. The limit of liability provision allowing the insurer to “repair or replace with like kind and quality” could reasonably mean, as Meridian posits, to restore to the insured a vehicle in a similar condition in appearance and function. However, it could also reasonably mean, as Allgood urges, to restore to the insured a vehicle similar in appearance, function and value.
“Like” is defined as “[p]ossessing the same or almost the same characteristics; similar . . . ; [a]like . . . ; [h]aving equivalent value or quality.” See footnote American Heritage Dictionary (4 th ed. 2000). “Kind” is defined as “[f]undamental, underlying character as a determinant of the class to which a thing belongs; nature or essence.” See footnote Id. “Quality” is defined as “[d]egree or grade of excellence: [as in] yard goods of low quality.” See footnote Id. “Like kind and quality” therefore includes some inherent concept of value. The importance of this construction is illustrated in the extreme by the case of Hyden v. Farmers Ins. Exch., 20 P.3d 1222 (Colo. Ct. App. 2000), reh’g denied, cert. denied.
Hyden owned a 1993 Jeep Cherokee that was involved in a collision in 1995. Prior to the accident, the Jeep was worth approximately $23,000. Hyden wanted the insurer to total the vehicle, but instead, the insurer elected to repair the Jeep at a cost of almost $17,000. In the opinion of a sales manager at a Jeep dealership, the Jeep was worth only $7,500 after the repairs. Hyden then sued his insurer for breach of contract. See footnote The trial court granted summary judgment for the insurer, but the Colorado Court of Appeals reversed, stating that once the insurer elects its choice of remedy, it is responsible for providing the insured with a vehicle of “like kind and quality.” Noting that phrase was ambiguous because it “fails to specify the protections afforded by the policy,” the court construed the phrase against the insurer and held that “the insurer must provide the insured, through repair, replacement, and/or compensation, the means of acquiring a vehicle substantially similar in function and value to that which the insured had prior to his or her accident.” Id. at 1225. The court also noted that although the insurer claimed that its only obligation was to return the vehicle in substantially the same condition as prior to the accident, a leading commentator had stated that “[a] vehicle is not restored to substantially the same condition if repairs leave the market value of the vehicle substantially less than the value immediately before the collision.” Id. (quoting L. Russ, Couch on Insurance 3D § 175:47 at 175-54 (1998)). If there is diminished value even after repair, we do not consider the repairs to have been adequate, and therefore disagree with Siegle and the line of cases cited by Meridian in footnote one above because those cases assume that the repairs are adequate in denying compensation for diminution in value.
Meridian contends that such a construction improperly imposes a tort standard on a contract case. However, as we hold that the inclusion of value is supported by the language of the contract itself, we disagree. Meridian also contends that this construction reads any option out of the contract, as the insurer would in all cases be insuring the value of the vehicle. We disagree with this contention as well. Payment for the actual cash value of the vehicle will not necessarily equal payment for repairs plus diminution in value in every case. One option is bound to be a lesser liability for the insurer. See footnote Thus, the limit of liability provision is not rendered meaningless by our construction.
No reasonable insured would read a policy containing a limit of liability provision like that in Hyden or herein and assume that, if he were involved in a collision and turned to his insurer to cover the loss, he might be left with only one-third of what he had before the collision. In most cases, the disparity between pre-collision and post-repair value is probably not so drastic as in Hyden. But the fact remains that a vehicle that has been involved in a collision is considered to have less value than a vehicle identical in all respects except that it has not been involved in such a collision. In undertaking to compensate Allgood for “direct and accidental loss” to her vehicle through one of several options, Meridian is primarily obligated to restore to Allgood what she has lost. That may require not only repair of the vehicle or replacement of its parts but also compensation for the diminution in value. It will, of course, be up to the insured to prove the value of the vehicle immediately prior to the collision as opposed to the value following repair.