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The Texas Standard Personal Auto Policy does not obligate an insurer to compensate a policyholder for a vehicle’s diminished market value when the car has been damaged but adequately repaired. Click here for the full text of this decision FACTS:Gary Schaefer purchased a standard automobile insurance policy from American Manufacturers Mutual Insurance Co. In October 1995, Schaefer’s vehicle was involved in an accident. It was inspected by an AMM adjuster, and the insurance company elected to repair the vehicle. Schaefer does not dispute the quality or adequacy of the repairs. Instead, he maintains that its value decreased $2,600 due to market perceptions that a damaged and subsequently repaired vehicle is worth less than one that has never been damaged. Schaefer claims that the policy obligates AMM to compensate him for that diminished value. Schaefer filed this class action against AMM and several other insurance companies that issue policies containing the same standard language regarding the limit of liability and payment of loss. He claims that AMM’s refusal to compensate him for his vehicle’s diminished market value violated the Texas Insurance Code and breached the insurance contract. Before any class was certified, Schaefer filed a motion for partial summary judgment arguing that AMM was liable for his vehicle’s diminished value as a matter of law. AMM responded and filed a cross-motion for summary judgment on the same issue. The trial court granted AMM’s motion and denied Schaefer’s. The court of appeals reversed the trial court’s summary judgment in AMM’s favor, holding that Schaefer could seek diminished-value damages under the policy and that the jury should determine if the repairs did or could restore the vehicle to “substantially the same condition and value” it had prior to the accident. The court expressly declined to follow a recent decision from the 14th Court of Appeals, Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454 (Tex. App. � Houston [14th Dist.] 2000, pet. denied), which held that the same policy language did not obligate an insurer to pay diminished-value damages for a vehicle that was adequately repaired. HOLDING:Reversed and rendered. The court agrees with AMM that the policy’s plain language, when read in context, giving effect to all contractual provisions, is unambiguous and does not require payment for diminished value when a vehicle has been fully and adequately repaired. While a vehicle’s diminished value may be a “direct loss” under the policy’s insuring provision, AMM’s obligation to compensate the insured for that loss is circumscribed by the policy’s “Limit of Liability” section. That section states, in pertinent part, that AMM’s liability for loss is limited to the damaged vehicle’s “actual cash value” or the amount needed “to repair or replace” the vehicle, whichever is less. The concept of “repair” with regard to a vehicle connotes something tangible, such as removing dents or fixing parts. The court does not believe that the ordinary or generally accepted meaning of the word “repair” connotes compensating for the market’s perception that a damaged but fully and adequately repaired vehicle has an intrinsic value less than that of a never-damaged car. To expand the ordinary meaning of “repair” to include an intangible, diminished-value element would be “ignoring the policy["s] language or giving the contract["s] text a meaning never intended.” Siegle v. Progressive Consumers Ins. Co., 819 So.2d 732 (Fla. 2002). The plain meaning of AMM’s obligation under the policy’s “Limit of Liability” section, paragraph 2, is to restore the vehicle, either through repair or replacement, to the same physical and operating condition it was in before the damage occurred. Requiring an insurer, who elects repair, to additionally pay cash for the market’s diminished perception incorporates an intangible value element into the repair provision that simply does not appear in the policy’s language. Inserting the concept of diminished value into the repair provision would similarly render the policy’s “Payment of Loss” section meaningless. Under this section of the policy, the insurer has an option to pay the insured in “money or repair or replace[ment].” Including diminished value in the concept of repair would force an insurer that chooses to compensate a loss by exercising the repair option to also pay money, ignoring the clause’s disjunctive language. Schaefer also contends that the policy covers diminished-value damages because they are not expressly excluded in the policy’s “Exclusions” section. But an exclusion’s purpose is to remove from coverage an item that would otherwise have been included. Liberty Mut. Ins. Co. v. Am. Employers Ins. Co., 556 S.W.2d 242, 245 (Tex. 1977). Absence of an exclusion cannot confer coverage. Because the policy’s language does not obligate AMM to pay for the diminished value of a car that has been fully and adequately repaired, the failure to include diminished-value damages in the policy’s Exclusion section is immaterial. Schaefer’s standard automobile insurance policy does not obligate AMM to compensate Schaefer for his fully repaired vehicle’s diminished market value. OPINION:O’Neill, J., delivered the opinion of the court.

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