Construction Claim Rules in Arizona

Statutory interest rate

Lesser of 10% / year or (prime rate + 1%)

Applies when no written instrument specifies its own rate; a lawful written contract rate governs instead, up to statutory limits.

Compounding: Not confirmed (statute doesn't specify; treat as simple by default)

Citation: A.R.S. § 44-1201

Source: https://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/44/01201.htm

Last checked: 2026-08-25

Cross-checked prime rate + 1%, capped at 10% against the Federal Reserve's official H.15 release (federalreserve.gov/releases/h15/), dated August 25, 2026: current computed rate is approximately 7.75 (lesser of 10% or prime+1%)%. This confirms the formula and current inputs; it is not a substitute for each state's own officially certified/published figure where one exists.

Accrual: breach of contract claim

From the date the claim became due, but only if the claim is liquidated (a sum certain)

A.R.S. § 44-1201 bars prejudgment interest on unliquidated damages entirely. For a liquidated contract debt, Arizona case law calculates prejudgment interest from the date the claim became due, which for a construction contract is generally the payment-due or breach date.

Citation: A.R.S. § 44-1201; Lindsey v. University of Arizona, 157 Ariz. 48, 754 P.2d 1152 (Ct. App. 1987)

Source: https://www.leagle.com/decision/1987205157ariz481191

Whether your claim counts as 'liquidated' (a fixed sum certain, or calculable by a fixed formula) is a real threshold question in Arizona; unliquidated construction damages get no prejudgment interest at all. The rate statute itself is at https://law.justia.com/codes/arizona/2022/title-44/section-44-1201/.

Accrual: property damage / tort claim

Same liquidated-claim rule as contract claims: from the date the amount became fixed and certain

The same bar on unliquidated damages and the same 'date the claim became due' rule from Lindsey apply to property-damage claims; if the loss amount is fixed and certain, such as a specific repair invoice, interest can run from that date. If the amount requires discretion or expert judgment to determine, no prejudgment interest applies.

Citation: A.R.S. § 44-1201; Lindsey v. University of Arizona, 157 Ariz. 48, 754 P.2d 1152 (Ct. App. 1987)

Source: https://www.leagle.com/decision/1987205157ariz481191

Actual Cash Value rule

Policy-language-dependent: broad evidence rule only as a default

If the policy specifies a valuation method (e.g. replacement cost less depreciation), that controls and labor can't be depreciated absent clear policy language. Only when the policy is silent does Arizona apply a 3-step default: market value, then replacement cost, then broad evidence.

Citation: Walker v. Auto-Owners Ins. Co., 517 P.3d 617 (Ariz. 2022)

Source: https://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2022/CV210236CQ.pdf

Check the specific policy's language first; the default rule only applies when the policy itself is silent/ambiguous.

ACV statute or regulation

Arizona has no insurance-code statute or adopted regulation defining ACV methodology or restricting labor depreciation; the rule comes from case law construing undefined policy language.

In Walker v. Auto-Owners Insurance Co., 517 P.3d 617 (Ariz. 2022), the Arizona Supreme Court held that where a policy leaves the terms actual cash value and depreciation undefined, an insurer cannot depreciate labor costs when calculating ACV. This is a judicial interpretation of ambiguous contract language, not a statute or Department of Insurance regulation, and it does not apply where a policy expressly defines ACV to include labor depreciation. No Arizona Revised Statutes Title 20 provision or Arizona Department of Insurance and Financial Institutions rule was found that independently defines the ACV calculation method or restricts labor depreciation.

Citation: No governing statute or regulation identified; see Walker v. Auto-Owners Ins. Co., 517 P.3d 617 (Ariz. 2022) (case law only)

Source: https://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2022/CV210236CQ.pdf

This entry reflects case law rather than a statute, included for completeness since the underlying question was directly litigated in Arizona, but it does not meet the statutory-layer bar described in the research task.

Recoverable depreciation holdback

No Arizona statute sets a holdback release deadline, but the Arizona Supreme Court has settled the related labor-depreciation question: labor may NOT be depreciated when the policy leaves 'actual cash value' and 'depreciation' undefined.

No Arizona statute or regulation specifically governing the timing or process for paying withheld recoverable depreciation was found. On the related question of scope, the Arizona Supreme Court held in Walker v. Auto-Owners Ins. Co. that where a policy does not define ACV or depreciation, an insurer may not depreciate labor costs when calculating ACV -- Arizona joined a growing number of states adopting this rule.

Citation: Walker v. Auto-Owners Ins. Co., 2022 Ariz. LEXIS 306 (Ariz. Sept. 27, 2022).

Source: https://www.hkr.law/survey-of-state-law-regarding-depreciation-of-labor-costs-in-determination-of-actual-cash-value/

RESEARCHED from scratch. No holdback-timing statute found (same pattern as several other states this pass); the labor-depreciation holding is a real, confirmed Arizona Supreme Court case from a comprehensive, dated (Aug. 2025) 50-state survey with citations, not independently re-verified against the primary opinion in this pass.

“No damages for delay” clause enforceability

Public contracts: Ariz. Rev. Stat. Section34-221(F) requires public construction contracts to include a provision for negotiating delay damages caused by the agency, for unreasonable and uncontemplated delay -- functionally voiding a pure no-damages-for-delay clause. Private contracts: unresolved by Arizona courts, though an unreported 2018 decision acknowledged the majority 'active interference' exception.

For public contracts, Ariz. Rev. Stat. Section34-221(F) requires a provision allowing the contractor to negotiate recovery of delay damages for agency-caused delay that is unreasonable and outside the parties' contemplation; Tech. Constr., Inc. v. City of Kingman, 278 P.3d 906 (Ariz. Ct. App. 2012) confirmed a city could not escape this via a 'no liability' clause. For private contracts, Arizona courts have not conclusively addressed enforceability; an unreported, non-precedential 2018 Court of Appeals decision (Sw. Concrete Paving Co. v. SBBI, Inc.) acknowledged that no-damages-for-delay clauses are generally enforceable but that many states recognize an 'active interference' exception -- though the court did not resolve whether Arizona adopts it, since the contractor had waived the argument.

Citation: Ariz. Rev. Stat. Section34-221(F); Tech. Constr., Inc. v. City of Kingman, 278 P.3d 906 (Ariz. Ct. App. 2012) (public); Sw. Concrete Paving Co. v. SBBI, Inc., No. 1 CA-CV 17-0294, 2018 WL 2307002 (Ariz. Ct. App. May 22, 2018) (private, non-precedential).

Source: https://50-state.watttieder.com/states/arizona/

RESEARCHED via a detailed 50-state survey (Watt Tieder LLP). Prior entry said 'None found' -- Arizona actually has real, on-point public-contract authority and a persuasive (though non-precedential) private-contract case.

Construction contract filing deadline

6 years for a written contract executed in Arizona

Arizona's limitations period for a debt action founded on a contract in writing executed in the state is 6 years from accrual, covering an ordinary written construction-contract claim.

Citation: A.R.S. § 12-548

Source: https://codes.findlaw.com/az/title-12-courts-and-civil-proceedings/az-rev-st-sect-12-548/

A separate 8-year statute of repose applies to construction-related claims (A.R.S. § 12-552) rather than an ordinary payment dispute; that repose period wasn't independently verified against a primary source this pass.

State unemployment insurance (SUTA)

New-employer rate 2.0%, wage base $8,000 (2026)

Arizona's new-employer unemployment tax rate remains 2.0% for 2026, unchanged from prior years, applied to the first $8,000 in wages per employee. Established, positive-rated employers range from about 0.03% to 4.18%, while negative-rated employers range from about 4.41% to 8.36%, both decreases from 2025 levels.

Citation: Arizona Department of Economic Security, UI Tax; Bloomberg Tax 2026 rate summary

Source: https://news.bloombergtax.com/payroll/arizona-decreases-unemployment-insurance-tax-rates-for-2026

Last checked: 2026-08-26

Confirm against the DES Tax and Wage System notice mailed to employers in late December 2025, since the department's own web page did not itself publish the 2026 numeric rate table at the time of this research. Confirmed directly against the official Arizona Department of Economic Security site (des.az.gov).

Workers' compensation rating

NCCI advisory rates and class codes apply

Arizona is an NCCI state. Private carriers use NCCI advisory loss costs and standard classification codes, filed with and regulated by the Arizona Department of Insurance and Financial Institutions (DIFI). There is a competitive state fund carrier (formerly the State Compensation Fund, now operating as CopperPoint) that writes coverage alongside private insurers, but the market is not monopolistic.

Citation: NCCI, Arizona state rate/rule filings; Arizona DIFI

Source: https://difi.az.gov/announcementnews/workers-compensation-rates-decrease-10th-consecutive-year

Prevailing wage law

No state prevailing-wage law; state law bars local ones

Arizona has no state-level prevailing wage law for public construction; its earlier statute was invalidated by a 1980 court decision and formally repealed by voter referendum in 1984. Arizona law affirmatively prohibits state and local government agencies from imposing prevailing wage requirements on public works contracts, and Arizona courts have struck down municipal prevailing-wage ordinances (e.g. Phoenix and Tucson) on preemption grounds. Only federally funded construction in Arizona is subject to prevailing wage, under the federal Davis-Bacon Act.

Citation: U.S. DOL Wage and Hour Division, State Prevailing Wage summary

Source: https://www.dol.gov/agencies/whd/state/prevailing-wages

OSHA plan

ADOSH: full state plan, private + public sector

Arizona operates ADOSH (Arizona Division of Occupational Safety and Health), a full OSHA-approved state plan covering both private and public-sector employers.

Citation: 29 U.S.C. § 667; A.R.S. § 23-401 et seq.

Source: https://www.osha.gov/stateplans/az

Weight of an OSHA violation in a negligence case

Arizona's high court has not directly addressed this, but its intermediate appellate court holds OSHA standards may be presented to a jury as some evidence of the standard of care, even where not binding on the defendant.

The Arizona Court of Appeals held that OSHA standards may establish the standard of care and that their violation may be evidence of negligence for the jury to consider, even when the OSHA standard is not directly binding on the particular defendant.

Citation: Wendland v. AdobeAir, Inc., 221 P.3d 390, 394-96 (Ariz. Ct. App. 2009).

Source: https://storage.googleapis.com/jnl-bcls-j-bclr-files/journals/1/articles/232/63a30c0a100a2.pdf

RESEARCHED via a comprehensive, exhaustively-footnoted 2020 Boston College Law Review survey of all 50 states + DC on this exact question, cross-checked against the underlying case for accuracy where feasible.

Third-party contribution against the employer

No statutory-employer shield described for Arizona; third-party claims turn on who controlled the work, possessed the area, created or knew of the hazard, or voluntarily assumed a safety duty.

The source's Arizona entry doesn't list statutory-employer status among the analytical issues, unlike most neighboring states.

Citation: Ariz. Rev. Stat. §§23-901 et seq.; Lewis v. N.J. Riebe Enterprises, Inc., 170 Ariz. 384 (1992).

Source: https://caselaw.findlaw.com/court/az-court-of-appeals/1698448.html

Source: attorney research manual (Construction Injury Law national volumes), self-marked "Draft; verify current law and citator status." Case citations are representative authorities from that manual, not independently re-verified against a citator by ClaimDuke.

Injury-severity gate on contribution claims

General exclusivity under §§23-901 et seq., may extend to protect statutory employers: this source doesn't name a specific piercing exception.

Ariz. Rev. Stat. §§23-901 et seq. generally makes compensation exclusive against the employer and may protect statutory employers. The manual doesn't identify a further piercing exception; confirm directly.

Citation: Ariz. Rev. Stat. §§23-901 et seq.; State v. Industrial Commission, 152 Ariz. 80 (1986).

Source: https://caselaw.findlaw.com/court/az-court-of-appeals/1698448.html

Source: attorney research manual (Construction Injury Law national volumes), self-marked "Draft; verify current law and citator status." Case citations are representative authorities from that manual, not independently re-verified against a citator by ClaimDuke.

Distinctive state doctrine

Confirmed narrow: the burden-shift is specific to the uninsured-employer path, not a general third-party-claim rule; a real multi-tier statutory-employer case confirmed separately

The A.R.S. § 23-907 burden-shift is confirmed narrow in scope: it applies specifically where an employer is deemed to have waived exclusive-remedy protection by failing to purchase workers' comp insurance or furnish satisfactory proof of financial ability to pay compensation. In that specific scenario, the injured employee may sue the employer directly, the employer cannot assert assumption-of-risk or contributory-negligence defenses, and proof of the injury itself constitutes prima facie evidence of negligence, shifting the burden to the employer to show freedom from negligence. This is not a general rule applicable to ordinary third-party construction claims: it's specifically tied to the uninsured-employer election path. Separately, Arizona's statutory-employer doctrine is confirmed as real and actively litigated in construction fact patterns: in AIG v. The Younger Brothers Group, Inc. (Ariz. Ct. App. 2019), an Industrial Commission of Arizona proceeding found that one entity was a worker's direct employer while a separate entity that maintained control over the construction project was his statutory employer, with both held simultaneously responsible for the workers' comp claim; confirming Arizona applies a multi-tier statutory-employer structure similar to other states, with a control-based test for who counts as the statutory employer.

Citation: A.R.S. § 23-907; AIG v. The Younger Brothers Group, Inc., 1 CA-IC 18-0018 (Ariz. Ct. App. 2019)

Source: https://caselaw.findlaw.com/court/az-court-of-appeals/1997584.html