Diminished value claims in Arkansas

Claims against the at-fault driver

In Daughhetee v. Shipley (1984), the Arkansas Supreme Court restated the rule that the measure of damages to personal property is the difference in its fair market value immediately before and immediately after the occurrence, and that the reasonable cost of repairs may be considered in finding that difference.

The same case shows what the court looks for: evidence of the vehicle's market value, not only repair figures. A claim for lost value after repair fits that measure when the owner can show the repaired car is still worth less than it was before the crash.

Claims under your own policy

MFA Insurance Co. v. Citizens National Bank of Hope (1977) was a claim on an auto policy that limited the insurer to the cost to repair or replace with parts "of like kind and quality." The Arkansas Supreme Court held that when repairs would not substantially restore the car to its former condition and value, the proper measure is the difference in value before the loss and after the repairs.

Policy wording has changed in many policies since then. Whether your own policy covers lost value depends on its exact words.

Filing deadline

Arkansas gives three years after the cause of action accrues for all actions for taking or injuring any goods or chattels (Ark. Code 16-56-105). Damage to a car falls under that rule.

That is the deadline for filing suit. Talking with an insurer does not by itself extend it. An Arkansas attorney can confirm how it applies to your dates.

How diminished value claims tend to go in Arkansas

Arkansas's insurance code lists unfair claims settlement practices, including failing to acknowledge and act reasonably promptly on claim communications, refusing to pay a claim without a reasonable investigation, and not attempting in good faith to reach prompt, fair settlements once liability is reasonably clear (Ark. Code 23-66-206).

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 Arkansas Insurance Department's Consumer Services Division takes complaints about how an insurer handled a claim. File with the Arkansas Insurance Department.

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 Oklahoma
• Diminished value claims in Missouri
• Diminished value rules in every state