Diminished Value Claims in Arizona: How Do They Work?

Executive Summary

• The Arizona diminished value law allows car owners to seek compensation for the decrease in a vehicle’s market value that can occur after an accident, even if the vehicle is repaired.
• Filing a diminished value claim in Arizona may require documenting the accident, acquiring a professional appraisal, informing the insurer and negotiating compensation.
• Some challenges that someone may face during an Arizona diminished value claim are proving diminished value, overcoming insurance denials and navigating Arizona-specific legal nuances.
• If approved, compensation usually ranges between a few hundred dollars for minor accidents and thousands for severe damage to newer vehicles. Still, the car’s model, age, condition and accident severity can influence the payout.

Understanding How Diminished Value Claims Work in Arizona

During 2023, a total of 122,247 crashes were reported throughout Arizona. In addition to jeopardizing lives, this abundance of crashes brought financial strife to Arizona residents. Unfortunately, even after a damaged vehicle has been repaired to meet industry standards, it can often lose resale value due to its accident history, limiting the benefits of a traditional insurance claim. Thankfully, the Arizona diminished value law can help car owners receive fair compensation for their losses.

After an accident, you may be able to submit a diminished value claim in Arizona to request payment for the reduced market value of a vehicle from the responsible party or their insurance company. Still, various challenges can stand in your way, ranging from proving diminished value to overcoming denials from insurance companies.

Sadly, car accidents can happen to anyone. So, it is important to understand how diminished value claims work in Arizona and the process of filing one. Read through the key considerations below and contact an experienced car accident lawyer in Phoenix or whichever part of Arizona you live in to increase your chances of getting the best possible results.

What Is a Diminished Value Claim?

In general, diminished value is the reduction in something’s worth. When it comes to vehicles, this term is commonly used to describe a decrease in a car, motorcycle or truck’s market value after an accident.

Even if the vehicle is repaired to meet industry standards, making it blemishless and safe enough to drive, its accident history can still lower buyer confidence and make the car, motorcycle or truck less desirable on the market. The Arizona diminished value law aims to combat this by allowing vehicle owners​​ to file a car accident claim in Arizona that requests payment from the responsible party to cover the dip in market value.

Types of Diminished Value

Reductions in value can happen in different ways. Some examples of diminished value types that can potentially warrant a diminished value claim in Arizona are:

• Immediate – The drop in a vehicle’s value right after an accident.
• Inherent – Permanent loss in a vehicle’s value due to its history of damage.
• Repair-related – Value reduction due to subpar or incomplete repairs.

You may be eligible for financial compensation under Arizona’s diminished value law if you have suffered any of the diminished value types above due to someone else’s negligence. Contact a reliable personal injury attorney to explore your legal options—you may also be able to recover damages for delayed pain after a car accident in Arizona.

How Arizona Has Handled Diminished Value Claims

Although ARS 12-1134 already spelled out how just compensation should be handled when someone’s land features a diminution in value due to governmental use, Arizona diminished value law for motor vehicles in accidents did not get fleshed out until 2011.

Paul Oliver v. James Henry, 227 Ariz. 514 (Ariz. Ct. App. 2011)

The case of Oliver v. Henry confirmed the legality of diminished value claims in Arizona, ruling that vehicle owners could claim compensation for the loss in resale value a car can experience following an accident, even if the vehicle has already been fully repaired.

Some key principles that the Court of Appeals of Arizona established for vehicle owners filing diminished value claims are:

• Proof without sale – Vehicle owners do not need to sell or trade their vehicle to prove diminished value. Alternatively, the loss can be demonstrated through reliable methods like expert appraisals.
• Loss occurs immediately – The reduction in a vehicle’s value is recognized at the time of the accident, regardless of whether the owner continued to use the vehicle after it was repaired.
• Burden of proof – It is the claimant’s responsibility to provide sufficient evidence, like professional appraisals, to demonstrate the vehicle’s loss in market value before and after repairs.

To help come to its ruling, the court referenced prior cases like Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 138 Ariz. 562, which supported the fact that a vehicle not yet sold does not render the damages unrealized or legally impermissible.

Thanks to this case, Arizona diminished value claims can be filed after repairs are completed, as long as it is evident the vehicle’s market value has decreased.

Filing a Diminished Value Claim in Arizona

Each situation may require a unique approach, depending on the type of diminished value your vehicle has experienced and the insurance company you are requesting payment from. However, in many scenarios, preparation for submitting a diminished value claim can start right after prioritizing everyone’s health and reporting the car accident to the police.

Steps for Filing a Diminished Value Claim

Some actions you may need to take to file a diminished value claim in Arizona are:

1. Document the damage – One of the most important things to do after a car accident when not at fault is to take photos of the damages. Collecting repair bills and accident reports to support your claim can also be helpful.
2. Inform your insurance company – Right after an accident, before diminished value rears its head, you should inform your insurance company of the crash. Keep their info handy, so you know who to call if someone hits your car.
3. Monitor your vehicle – After repairs are made, photograph any cosmetic issues on the vehicle and take note of performance issues.
4. Get an independent appraisal – Hire a reputable professional appraiser to estimate the diminished value of your vehicle. Ensure they perform a thorough inspection to avoid overlooking damages.
5. Report the diminished value – Once you have concrete evidence of the vehicle’s diminished value, submit the claim to the responsible party’s insurer.
6. Negotiate for compensation – You may be presented with low offers in an attempt by the insurer to limit claim payouts. Be prepared to counter unrealistically low offers and provide further documentation.

A trustworthy personal injury lawyer providing legal advice through the above process can encourage more desirable results. If you and the insurer cannot come to an agreement, you may be able to request a formal appeal through an Arizona court—your lawyer can tell you what you need to know when suing after an accident.

Who Can File a Diminished Value Claim?

Typically, any car, motorcycle or truck owner involved in an accident in Arizona can file a diminished value claim if their vehicle was damaged in an accident that was not their fault. This means owned, leased and financed cars may all qualify; however, eligibility can vary depending on a lender’s or lessor’s specific policies.

For those who qualify, claims are usually filed through the at-fault driver’s insurance company since they are normally responsible for covering damages, including indirect decreases in a vehicle’s resale value following a collision. When drivers disagree about who caused the car accident, fault may be determined by the location of the damage on the vehicle or nearby surveillance footage. Unique scenarios like accidents on private property in Arizona can make determining fault more challenging.

Common Challenges with Diminished Value Claims

Despite the Arizona court’s clear ruling on diminished value claims, it can still be difficult for some individuals to get paid fairly. Some examples of obstacles that claimants may face when requesting compensation for diminished value are:

• Insurance denials – Historically, insurance companies have downplayed or denied diminished value claims to minimize payouts. Insurers refuting denials can extend the timeline for an auto accident settlement.
• Proving loss – Confirming the exact loss in value requires expert, personalized appraisals and clear documentation. Some appraisal companies rely on software that delivers generalized estimates that insurers do not accept.
• Varying interpretations – Some insurers may have differing ideas for what qualifies under Arizona’s diminished value law. These inconsistencies can lead to pushback, delays and extra administrative hoops to jump through.

Navigating insurance practices or legal nuances can be challenging without guidance from a knowledgeable attorney. Make the process easier by relying on a personal injury lawyer with experience fighting for diminished value claims in Arizona.

How Much Can You Recover from a Diminished Value Claim?

Generally, diminished value claim payouts can vary between a few hundred dollars for instances of minor damage and thousands of dollars for significantly devalued vehicles. Still, various factors can affect compensation. Some examples of circumstances that can impact payout amounts for diminished value claims in Arizona are:

• The vehicle’s make
• The vehicle’s model
• The age of the vehicle
• Repair quality
• Market demand
• The visibility of the accident on public vehicle reports like CARFAX

The resulting compensation should closely cover the difference between the pre-accident value of the vehicle and its market value after repairs. Still, not every insurance company will immediately offer a high enough payout to accurately cover your vehicle’s depreciation in value. Thankfully, expert appraisals and detailed evidence can help you fight for fair compensation.

The Role of an Attorney in Diminished Value Claims

Attorneys can play a crucial role in diminished value claims by guiding clients through the legal process and guaranteeing all requirements are met. Their legal expertise can facilitate the documentation of claims and the presentation of evidence. They also know how to negotiate a car accident settlement with insurance companies, helping you secure payment that is as fair as possible.

Pursue Your Right to File a Claim

Since the Arizona diminished value law can help car owners seek compensation for the loss in their vehicle’s market value after an accident, it is important to know when and how a claim can be filed. Diminished value claims in Arizona can usually be submitted for any cars, motorcycles and trucks that have been in accidents, regardless of whether or not they have been repaired yet.

The 2011 court case Oliver v. Henry confirmed that Arizona vehicle owners can claim diminished value without needing to sell the vehicle, assuming the loss can be proven using expert appraisals and documentation of damages.

To avoid challenges, such as insurance denials and proving the exact loss, consult the knowledgeable personal injury attorneys at JacksonWhite Law. We can help you navigate legal hurdles in an attempt to secure just payouts for common types of accidents, including car crashes that lead to diminished value.

Call the JacksonWhite personal injury team at (480) 467-4392 for a free consultation concerning diminished value claims.