The only way to remedy unethical and unfair behavior is to expose it to the entirety of victims that it affects in the hopes they will stand up to the bullies.  It is a shame that those in power seem to have a propensity to abuse it (crony capitalism anyone?).  To that end, I hope this article reaches many victims and their legal counsel, and that at least some of them take a stand with me and demand action from their representatives at the State.

The title of this article is exactly what is happening.  As an expert appraiser, I have numerous cases that in-arguably demonstrate the problem. A bit further down this page, I offer the exact text on one such instance for you to see and think about.  What is happening is that various big insurance carriers (USAA, in the subject case, but other big ones do it, too) are simply ignoring the law and refusing to pay valid damage claims.  They like to do it on cases that are relatively low in value because it is difficult to convince an attorney to help when the damages aren’t extensive. On a contingency agreement, the payoff will be too small, and hourly help from an attorney is very expensive, requiring big stakes to be able to afford.  I don’t think many people would consider $1,000.00 – $10,000.00 a small amount when it is a loss suffered by an accident victim, but an attorney doesn’t make enough money on cases in that range if they work on contingency.  If paid by the hour, well like we said, it is not cheap to pay $200 / hr (average for a good one) for an attorney’s help, so it quickly becomes very hard to economically fight.  This is a fact that big insurance and the AZ department of insurance capitalize on.

Do you think $1,000 – $10,000 is a small amount for an accident victim to suffer simply because they can’t hire an attorney?  It sure adds up for companies that refuse to pay those smaller claims.  Small claims court you say?  Nope, not in Arizona.  Attorneys for the insurance company will simply request a change of venue (a rule that allows them to do that exists in AZ) so no small claims help for victims of this abuse!

Here is the text of the original complaint filed by one of my customers (with identifying info removed). . . .

The complaint form for AZ department of insurance asks:

“What did the insurance company or agent do or failed to do?” (Yes, it says “failed”)

The customers answer. . .

“USAA misrepresented facts, and refused to pay my claim without conducting a reasonable investigation based upon all available information, AND they provide no applicable law to explain their offer of a compromised settlement.  I am a third-party claimant to the USAA policy.  The negligence of the USAA insured is admitted, and USAA accepted liability on behalf of their insured.  USAA requested proof of my damages, which I submitted.  My proof is the only kind available without selling my vehicle (which is now gonna be very hard).  It is in the form of an expert appraisal from a known, published, peer-reviewed and credible expert who used reliable methods based on relevant facts.  The evidence meets all the requirements as dictated by Arizona rules of evidence and relevant case law (also provided).  USAA has not challenged my expert’s credentials or report.  Additionally, I have provided exact case law exactly on point regarding my right as a third-party claimant to recover damages for my lost market value (see attached Oliver v. Henry case).  USAA stated in their denial “professionally competent repairs do not diminish the value of the vehicle”.  In the case law precedent (Oliver), the court stated “However satisfactory the repairs may be in, say, the operation of a car, the owner may quite possibly find that the trade-in value of his car is less when he seeks to purchase a new automobile, or that its cash sale value is less throughout the immediate life of the car.”  Additionally, the court stated that “. . . proof could come in another form, such as the evidence proffered by the Plaintiff in this case through expert testimony.”  USAA admitted to using an unreliable formula that is specifically rebuked by the Insurance Commissioner in GEORGIA where it originated (commissioner opinion was provided to USAA).  In the face of the exact type of evidence produced in standing AZ case law, USAA still claims that the burden of proof in my claim has not been met.  They offer no reasoning as to what would satisfy the burden in their eyes, nor do the offer any reasoning for refusing to accept the expert evidence I have provided to them.  In fact, they specifically agree that they are not saying that my expert is not qualified or credible, yet they continue to refuse to make any reasonable offer to settle the liability of their insured, citing no reason at all, just that I haven’t met “their” burden of proof.  They refuse to offer any documentation reflecting their research and they said they would have an appraiser speak with my expert, but then just called me and verbally denied to my by claim again.”

End of customer answer. . . .

Next, the complaint form asks the customer:

“What would you like the Department of Insurance to do to help you?”

The customer’s answer:

“It seems clear that USAA is not reasonably attempting to settle my claim, and that they have based their offer on no research or reliable foundation.  Fine USAA for violating the law or at least make an opinion that they should pay what the expert appraisal indicates or obtain expert evidence supporting their position.  Without an independent expert of their own, they have no valid defense to the amount of my damage claim.


1.  They misrepresented pertinent facts stating there is no diminished value on a competently repaired vehicle.  Violation of A(1)

2.  They refused to consider valid information made available to them.  Violation of A(4)

3.  They have refused to provide a reasonable explanation or applicable law to justify the offer of a compromised settlement.  Violation of A(15)”

End of customer answer. . . .

Now, guess what the Arizona Department of Insurance did . . . that’s right; NOTHING!

They simply said they didn’t see a problem.  What?  So the customer made a followup to the lack of action. . . .

here it is:

“Department of Insurance

State of Arizona

2910 North 44th St., Ste. 210

Phoenix, AZ 85018

Via  Facsimile:  602-365-2505


Re:                         Claim #:


Loss Date:            08/28/2013


Property Damage:

 Attn:  Dawn Lucero:

I am in receipt of your recent response to my complaint regarding USAA.   Of course, I am frustrated with the lack of action by the department.  I respectfully request that the department take a second look at my case and consider new information that I am providing with this correspondence.  Below is a summary of what I would like for you to review, please:

Your office references title 20 of the Arizona Revised Statutes and Arizona Administrative Code, Title 20, Chapter 6, and admits that the statutes impose a duty on an insurer to conduct reasonable investigations and to utilize all available information.  But, you advised that the department was unable to conclude that USAA violated Arizona insurance laws in the handling of my claim based on what was in my file.  Since that is your position, I want to provide you with better and more specific information regarding the issue of diminished value and how the law in Arizona regarding the proper handling of claims can be cited and utilized to give the Department the authority to take action to protect Arizona insurance consumers and accident victims like me that must deal with licensed insurance carriers.

 In Title 20, Chapter 2, Article 6 Section 461 of the Arizona Revised Statutes, it states:

 A. A person shall not commit or perform with such a frequency to indicate as a general business practice any of the following:

1.    Misrepresenting pertinent facts or insurance policy provision relating to coverages at issue.

4.   Refusing to pay claims without conducting a reasonable investigation based upon all available information.

6.   Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.

15.   Failing to promptly provide a reasonable explanation of the basis in the insurance policy relative to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

At no point has USAA mentioned any part of the policy of_____________ as a basis for their denial of my full diminished value claim, and their official position is that they do not negotiate on diminished value claims, nor do they provide any reason or explanation of their offer of a compromise settlement.  This is a common practice for USAA and happens every time there is a diminished value claim.  The problem is that their position is in stark contrast to the controlling case law on the matter.  Since it is their official position that they do not negotiate on DV and that they do not have to explain their reasoning, it is surely a general business practice for them to improperly attempt to offer unsubstantiated compromised settlements on diminished value claims.  I also want to point out that none of the statute cited above limits its application just to insured parties, so as a third-party claimant the statute applies to the handling of my claim, too.  In general, liability insuring agreements state that the insurer will settle or defend valid claims against their insured.  In fact, Title 20-461 requires that insurers to attempt good faith settlement efforts when liability has become reasonably clear.  The Title also requires insurers to conduct reasonable investigations using all available information BEFORE they refuse to pay a claim.

If the policy says that USAA will settle or defend liability claims for their insured, then they must in good faith address my claim against their insured, AND the Statute also requires they conduct a reasonable investigation using all available data BEFORE they refuse to pay my claim for diminished value.  So, IF they deny my claim or offer a compromised settlement, they must promptly provide a reasonable explanation for the basis in the policy which relates to the facts or applicable law for the denial or offer of a compromised settlement.  Unless USAA can provide facts or evidence that the appraisal on my lost value claim is incorrect or insufficient, then the evidence I have proves that USAA violated Title 20, AND that their insured owes me over ______ for the lost market value my vehicle suffered.  Consider this further explanation using the language in your Title 20. . . .

Evidence Exhibit  #1:  “APPLICABLE LAW”

If tort measures of damages and case law is not applicable law in my case, then what is applicable?  If USAA is to deny my claim, they need to cite case law, facts or policy provisions that supports their position that the amount of diminished value is not proven by expert appraisal (which the law says it is).  By virtue of the AZ constitution, I have a right to bring an action for the recovery of my damages against their insured.

Article 18, Section 6 of the ARIZONA CONSTITUTION states:

“The right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall not be subject to any statutory limitation.”

Additionally, tort law is governed by the widely accepted legal principles, courts and relevant case law.  So the legal liability of the USAA policy holder is determined by case law, and in Arizona, the controlling case law is the Oliver v Henry case that was previously cited (again provided for the review of the Department).  THEREFORE, the applicable law on my claim is CASE LAW, and since there has been no appeal of the CASE LAW, it is controlling in my case, meaning USAA cannot simply ignore or fail to consider it (unless the Department allows them to).  The law is clear that expert appraisal is sufficient evidence of lost value, and the measure of damages on torts involving chattels is defined by the Restatement of Torts, Section 928:

Where a person is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for (a) the difference between the value of the chattel before the harm and the value after the harm, or at the plaintiff’s election, the reasonable cost of repairs or restoration where feasible, with due allowance for any difference between the original value and the value after repairs, and (b) the loss of use.

There is no argument that USAA is bound by their policy to settle liability claims brought against their insured when it is reasonable to do so.  In every single case where a third-party claimant has been forced to sue for diminished value, the court has awarded it when proven by expert appraisal.  It is completely unreasonable and unethical for USAA to ignore the relevant law on this matter.

Evidence Exhibit #2:  “MISREPRESENTED FACTS”

Title 20 requires that insurers refrain from misrepresenting pertinent facts relating to coverages at issue.

In their discussions with me, USAA stated they are not required to negotiate on diminished value claims, and that they are not required to provide me with a reason based in law, fact, or the policy for their denial.  According to your Statute, this is completely false.  There is clear law that establishes the fact that repairs DO diminish the value of a vehicle and that diminished value as documented by a professional IS part of the damages a third-party claimant is entitled to recover in tort.  Will the Department sit idly by and continue to let USAA misrepresent facts to both the Department and accident victims regarding how diminished value is documented?  They are flat-out lying to both of us and the Department DOES have authority (by it’s own code) to take action by finding that USAA violated Title 20, and the Department could create an administrative rule or make a formal statement regarding diminished value.  If USAA still feels the Department is wrong, they can request a judicial review and use the court system to enforce law, just like they are attempting to force me to do and like that have forced others before me to do regarding their diminished value disputes.  The doctrine of Stare Decises is clear that case law is required for consistent rulings.  Case law is LAW, and the department CAN make an opinion / rule regarding the evaluation of diminished value claims based on applicable case law.

Please advise me if your office intends to take any further action regarding my case, in light of the new information I have provided.


Frustrated Accident Victim”

So surely, the Arizona Department of Insurance could get involved now, right?

Over a year has passed and no response has been forthcoming. . . . .  A suit is going to be required.

Want more info on this subject?

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PHOTO SOURCE: “Money money money” by mompes