The suit leading to the settlement involves claims that customers in Georgia over the last six years were entitled to payment for their vehicles' loss of market value after an accident in addition to repairs.

The inherent diminished value at issue was defined as the alleged difference between a vehicle's pre-loss value and its post-loss value after complete and proper repair.

Allstate said the settlement was reached as a result of the Georgia Supreme Court's Nov. 28, 2001 decision interpreting diminished value, which went against State Farm Insurance in a separate class action.

Dave Hurst, a State Farm spokesman in Bloomington, Ill., said the company as a result of that case paid $50 million in attorney fees and set up a settlement fund of $100 million to cover claims going back to 1993 involving about 700,000 customers.

The settlement was reached, he said, because, "We felt it was in the best interest of policyholders. We still dispute the allegations and continue to believe diminished value is a rare occurrence."

Both Mr. Hurst and Allstate spokesman Michael Trevino noted that in other states, Delaware, Texas, Louisiana and Massachusetts among them, insurers have secured appeals court rulings that auto policies do not cover diminished value.

C. Neal Pope with the Atlanta firm of Pope, McGlamry, Kilpatrick, Morrison & Norwood, which brought the case against Allstate, said, "Between State Farm and Allstate we've now settled on behalf of one million Georgians."

Mr. Pope said his firm has similar cases pending against the GEICO, USAA, The St. Paul, Nationwide, Georgia Farm Bureau, USF&G, Cotton States and Progressive insurance companies.

He said the ruling from the State Supreme Court involved a statute that had been "the law of Georgia since 1926. It had just been ignored by the insurance companies."

Mr. Pope said that while insurers may label the Georgia legal position "bizarre" and unusual, "I don't think we're unique at all. Colorado had a court ruling like this in 2000 and Tennessee and Mississippi follow what we consider to be the majority rule."

Allstate said that since 1998 it has been implementing policy language in a majority of states reaffirming that its collision and comprehensive coverages do not include diminished value claims.

The company said it is still fighting several legal actions involving diminished value class actions in other states, including one Illinois case in which a multi-state class has been certified.

Allstate recorded a reserve related to this settlement in its fourth quarter 2001 results totaling $59 million on a pre-tax basis and $38 million on an after-tax basis, or approximately 5 cents per diluted share.

Mr. Trevino said the suit involved 274,000 claims involving amounts, on average, of between $150 and $215. Allstate has a 12 percent auto insurance market share in Georgia, he said.

Last November after the State Supreme Court ruling David J. Colmans, a spokesperson for the Georgia Insurance Information Service, which represents insurers in the state, said the cost of diminished value claims could end up being passed on to consumers.

Mr. Hurst said that diminished value payments as now implemented in Georgia involved a complicated formula that factors in such things as the mileage on the damaged vehicle.