Ohio High Court Finds Consumer Laws Don’t Apply to Insurer Repair Estimates

By Denise Johnson | January 4, 2016

The Ohio Supreme Court has ruled that laws protecting consumers from deceptive practices don’t apply to insurance company repair estimates.

The court made that ruling on Tuesday in the case involving a Columbus insurer, voting 5-2 to overturn a lower court ruling that said an insurance company providing a repair estimate constituted a “consumer transaction.”

The case involved a couple, Jerry Dillon and Nancy Dillon, who sustained damage to their vehicle when they collided with a deer. Farmers Insurance of Columbus, Inc., insured the Dillons’ vehicle.

The Dillons chose Mission Auto Connection, Inc. to repair the vehicle and filed a claim with their Farmers agent so the vehicle could be repaired. A Farmers claim representative inspected the damage and prepared a written repair estimate that included the use of aftermarket replacement parts that were not produced by the original equipment manufacturer, OEM. The written estimate was provided to Mission Auto by the claims representative. The repair shop called the Dillons to notify them of the use of aftermarket parts.

Since their vehicle was only two years old and they were were worried the non-OEM parts would reduce the value of the vehicle, the couple disputed the use of cheaper, aftermarket parts versus OEM parts. The claim representative states that their auto insurance policy permitts the use of non-OEM parts. The couple moved forward with the repair using OEM parts, which resulted in a repair that was about $1500 more than the Farmer’s estimate.

The couple filed a complaint against Farmers citing the insurer’s estimate and denial to pay for OEM parts. According to the high court opinion, “Farmers moved for judgment on the pleadings and for summary judgment, both of which were denied. The Dillons moved for summary judgment on one of their claims, asking the trial court to find that Farmers violated the CSPA by failing to obtain one of the Dillons’ signatures on the bottom of the estimate that was based on the use of non-OEM parts, in violation of R.C. 1345.81(B)(1). The trial court granted summary judgment to the Dillons on that claim, and the Dillons voluntarily dismissed the remainder of their claims.”

At a damages hearing, the Dillons were awarded $30,613.66 in actual damages, statutory, treble damages, attorney fees and expenses.

Farmers appealed and argued that “the trial court erred in (1) denying its dispositive motions and granting the Dillons’ motion for summary judgment, (2) awarding attorney fees and determining the amount of the fees, and (3) awarding treble damages and calculating the amount of the damages. The Fifth Appellate District rejected the first two assignments of error but partially sustained the third, reducing the damages award to $29,092.59.”

The court’s written ruling said that a 1990 law applicable in the case specifically exempts dealings between insurers and customers from the definition of a consumer transaction.

The couple had successfully sued using the Ohio Consumer Sales Practices Act.

The case is Dillon v. Farmers Ins. Of Columbus, Inc., Slip Opinion No. 2015-Ohio-5407

The AP contributed to this article.

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