In Blakely v. State Farm Mut. Ins. Co., 406 F.3d 747 (5th Cir. 2005), the court ruled that an auto insurer was not liable for paying diminished post-repair value and that a policy preclusion for recovery of diminished value was not against public policy.

Several insureds who submitted claims for auto repairs to their auto insurer, State Farm, brought action against the insurer because they alleged they should have been compensated for the lowered market values of their vehicles following repairs.

The insureds' policies provided limits of liability for loss that were the lower of "1. the actual cash value; or 2. the cost of repair or replacement." The "cost of repair or replacement" was defined as "1. the cost of repair or replacement agreed upon by you and [State Farm]; 2. a competitive bid approved by [State Farm]; or 3. an estimate written based upon the prevailing competitive price."