Arizona Diminished Value Claims on AZ Minimum Insurance Limits

As we reported earlier, Governor Ducey vetoed the bill that would have raised Arizona’s minimum required auto liability insurance coverage. This means that if you are in a car accident and the other person is at fault, they may have as little as $10,000 to cover damages to your vehicle (in addition to any other property damage they caused). These low minimum limits mean you are at risk of not getting paid in full for repairs to your car, and there may not be enough money left over for an Arizona diminished value claim that would compensate you for lost resale or trade-in value on your vehicle.

$10,000 Might Not Be Enough Money

The biggest risk is $10,000 might not be enough money to repair your car. If your vehicle sustains $15,000 in damage and the person who hit you has a minimum $10,000 policy, their insurance is not going to pony up the extra $5,000 out of the kindness of their hearts. Insurance is a contract, so even if your vehicle is totaled out and the fair market value is over $10,000, all that person’s insurance is obligated to pay you is the $10,000 their contract allows for. That also means there is no additional money for you to recover for an Arizona Diminished Value Claim.

You can protect yourself and ensure there is money for repairs by adding collision coverage to your personal insurance. It is very rare that your contract stipulates you can make an Arizona Diminished value claim to your own insurance. However, to cover the excess repair bills you can pay your deductible to have your insurance cover the unpaid amount. Sometimes your deductible can be refunded to you if the other party has enough coverage. Gap coverage insurance may be helpful as well in the event that your car is totaled, and the fair market value is less than what you still owe.

Sometimes You have to Split the $10,000 with Other Victims: Pro Rata Split

If a driver hits your car, another car, and a light pole, the $10,000 has to be split to pay for those three damages. In theory, you could sue the at fault driver to try and recover your full damages. But, that is often not practical. The amount you normally get from the insurance policy is proportional to the cost of your repairs versus the total cost of all other victim’s property damage. Let’s look at some hypothetical numbers as an example:

If both victim cars and the light pole have $10,000 in damages each, the $10,000 insurance policy is split equally 3 ways and you, the other driver, and the city who owns the light pole each get $3,333.33 (and you can fight for the last extra penny if you want).

Hypothetically, you could also make an Arizona diminished value claim to swing the pro rata split into your favor. Consider the previous example, but now add a claim of $10,000 diminished value to your vehicle.

Your damages are now valued at $20,000 compared to $10,000 for the other car and $10,000 for the light pole. This means the pro rata split of the insurance’s $10,000 awards $5,000 to you, $2,500 to the other driver, and $2,500 to the city that owns the light pole, assuming everyone agrees.

Ideally, you won’t be in a position where the damages from a car accident are larger than the available insurance. When there is available property damage coverage, it is easier to make an Arizona diminished value claim to recover the resale or trade-in value that your vehicle has lost by being damaged in an accident. With the current minimum liability limits remaining at $10,000, a lack of coverage is still a risk. We recommend you review your insurance coverages to ensure you are protected. We broke down the specifics of the current minimum limits and the types of coverage you can obtain in an earlier article here, for your convenience.

Speak with an Experienced Accident Attorney for Free

If you are dealing with an accident involving minimum limits or would like information on making and Arizona diminished value claim, call us for a free consultation with an experienced accident attorney to analyze your case. We are happy to look it over with no obligation.

If you have been in an accident in Scottsdale, Tempe, Mesa, Gilbert or elsewhere in the East Valley we can meet you in our Tempe office. If you live in the West Valley we can also meet you in our Peoria or Surprise offices to discuss your personal injury or diminished value claim.