Diminished value claims in Arizona

Claims against the at-fault driver

In Farmers Insurance Co. of Arizona v. R.B.L. Investment Co. (1983), the Arizona Court of Appeals held that the measure of compensation to the owner of a negligently damaged motor vehicle may include the cost of repair and proven residual diminution in fair market value. Loss of use was recoverable as well.

In Oliver v. Henry (2011), the Court of Appeals affirmed a diminished value award on a repaired 2008 Jeep Wrangler. The court held the owner did not have to sell or trade in the car to prove the loss; expert appraisal evidence was enough.

Claims under your own policy

In Johnson v. State Farm (1988), the Arizona Court of Appeals held that under "repair or replace with like kind and quality" wording, the insurer's liability was limited to the cost of repairing the car, less the deductible, where the repair was completed without complaint. The court distinguished cases where the repair itself was disputed or defective.

The wording of your own policy controls what it covers.

Filing deadline

Arizona gives two years after the cause of action accrues for an action for trespass for injury done to the property of another (Ariz. Rev. Stat. 12-542(3)). Damage to a car falls under that rule.

Arizona's claims rule requires an insurer to give a third-party claimant written notice 60 days before a statute of limitations runs out (Ariz. Admin. Code R20-6-801(G)). Do not rely on that notice; plan around the two-year date. An Arizona attorney can confirm how it applies to your dates.

How diminished value claims tend to go in Arizona

Arizona's claims rule sets clocks for insurers: acknowledge a claim within 10 working days and complete the investigation within 30 days unless that is not reasonably possible (Ariz. Admin. Code R20-6-801(E) and (F)). Arizona's unfair claim settlement statute also requires good-faith efforts at prompt, fair settlement once liability is reasonably clear (Ariz. Rev. Stat. 20-461).

Insurers commonly ask for proof of the lost value. Oliver v. Henry accepted an expert appraisal as that proof.

Many insurers answer a diminished value request with a formula rather than a market study. The best known is the 17c formula, which came out of the Georgia class actions over first-party claims that followed State Farm v. Mabry; its name comes from paragraph 17(c) of an injunction in one of them. It starts from a capped share of the car's value before the crash, then reduces it with damage and mileage modifiers. A law-firm survey notes it was built for that class action and has not been formally adopted for general use.

Adjusters commonly ask for proof that the repaired car is worth less, not only proof that it was damaged. Records that tend to matter: the final repair invoice and photos, the estimate showing any structural or frame work, the vehicle history report entry, and written market evidence such as dealer quotes or listings for the same car with and without an accident history.

Lost value is easiest to show once repairs are finished, because the value after repair is what gets compared with the value before the crash.

If you have a complaint about claim handling

The Arizona Department of Insurance and Financial Institutions takes consumer complaints about how an insurer handled a claim. File with the Arizona Department of Insurance and Financial Institutions.

Next steps

• How Reclaim's diminished-value check works
• Estimate a figure with the diminished value calculator
• How to file a diminished value claim
• Diminished value claims in California
• Diminished value claims in Utah
• Diminished value rules in every state