Are Diminished Value Claims Valid in an Arizona Auto Accident?

An accident not only makes it more difficult to sell a vehicle, it decreases its resale value. Although the insurance company restores the vehicle to its previous physical condition, that does not completely restore the value of the vehicle.

Definition

A vehicle decreases in value after it has been in an accident. Diminished value is the difference between the resale value of the vehicle before the accident and its resale value after the accident. For example, if the resale value of the vehicle was $10,000 before the accident and the value, including repairs, after the accident is $8,000, the diminished value of the vehicle is $2,000.

Insurance

Although Arizona statute does not prohibit diminished value claims, insurance companies routinely use diminution of value exclusion endorsements in their policies to prohibit claims. This prevents policyholders from filing claims for the diminished value of the vehicle.

Claims

A person can file a claim against a third party's insurance company for the diminished value. The insurance company may require proof of the diminution in value. In Arizona, the claimant must file a claim within two years from the date the property damage occurred.

References

• FindLaw: Determining Value and Diminished Value