dissenting.*
¶ 19 “ ‘[Cjourts have not formulated a consistent, reliable body of doctrine to determine the extent to which [R]ule 408 bars evidence of ... statements made during [compromise] negotiations’ when offered [to impeach a party].” Fred S. Hjelmeset, Impeachment of Party by Prior Inconsistent *201Statement in Compromise Negotiations: Admissibility Under Federal Rule of Evidence 408, 43 Clev. St. L.Rev. 75, 108 (1995) (brackets added) (footnote omitted) (quoting Wayne D. Brazil, Protecting the Confidentiality of Settlement Negotiations, 39 Hastings L.J. 955, 974 (1988)). Not surprisingly then, differences of opinion arise as to the proper impeachment use of statements made in compromise negotiations. I conclude that a notice of claim filed pursuant to A.R.S. § 12-821.01 is a statement made in compromise negotiations triggering the exclusionary principles of Rule 408, Ariz. R. Evid., 17A A.R.S. Further, I conclude that impeachment of a plaintiff or defendant with prior inconsistent statements made in compromise negotiations concerning the facts of an accident is not a proper exception to Rule 408. Such use of those statements does little to foster the truth-seeking process and does far too much to frustrate the policy of encouraging prelitigation settlements. Accordingly, I respectfully dissent.
¶ 20 The majority chose not to address the issue of whether Rule 408 applies to a notice of claim filed under § 12-821.01 because the majority concludes that Rule 408 does not bar the admission of the prior inconsistent statements in any event. Because I conclude that Rule 408 precludes the use of such statements, I must first analyze whether Rule 408 in fact applies. The state argues, and a majority of the Court of Appeals concluded, that a dispute triggering Rule 408 does not exist when a person files a notice of claim against a public entity or employee because the entity or employee has not yet taken a contrary position. Hernandez v. State, 201 Ariz. 336, ¶ 12, 35 P.3d 97, ¶ 12 (App.2001). That construction of Rule 408 is too narrow and overly restricts the policy underlying the rule.
¶ 21 Section 12-821.01 requires any person who has a claim against a public entity or employee to file a notice of claim within 180 days after the claim accrues. That notice of claim must include “facts sufficient to permit the public entity or public employee to understand the basis upon which liability is claimed.” § 12-821.01(A). It must also contain “a specific amount for which the claim can be settled and the facts supporting that amount.” Id. The purpose of the notice of claim statute “is to allow the public employee and his employer to investigate and assess their liability, to permit the possibility of settlement prior to litigation and to assist the public entity in financial planning and budgeting.” Crum v. Superior Court, 186 Ariz. 351, 352, 922 P.2d 316, 317 (App.1996) (emphasis added). Consequently, the notice constitutes a statutorily mandated commencement of compromise negotiations.
¶ 22 Under the first sentence of Rule 408, evidence of furnishing or offering to furnish, accepting or offering to accept a compromise of a disputed claim “is not admissible to prove liability for or invalidity of the claim or its amount.” The Advisory Committee Notes to Rule 408, Fed.R.Evid.,6 state that the rule is not invoked by instances such as “indue[ing] a creditor to settle an admittedly due amount for a lesser sum,” but rather where “the claim [is] disputed as to either validity or amount.” See also Affiliated Mfrs., Inc. v. Aluminum Co. of America, 56 F.3d 521, 528 (3d Cir.1995) (dispute requirement covers “both litigation and less formal stages of a dispute,” including “an apparent difference of opinion between the parties”); Dallis v. Aetna Life Ins. Co., 768 F.2d 1303, 1307 (11th Cir.1985); Schlossman & Gunkelman, Inc. v. Tallman, 593 N.W.2d 374, 378 (N.D.1999) (for purposes of evidence rule virtually identical to Rule 408, Ariz. R. Evid., “a claim is disputed if there is a difference in interests or views which the parties are attempting to resolve through compromise negotiations”).
¶ 23 The second sentence of Rule 408 expands the exclusion further, stating: “Evidence of conduct or statements made in compromise negotiations is likewise not admissible.” The Advisory Committee Notes to the federal rule explain the purpose of the second sentence: “Another effect [of the pri- or rule] is the generation of controversy *202over whether a given statement falls within or without the protected area. These considerations account for the expansion of the rule herewith to include evidence of conduct or statements made in compromise negotiations, as well as the offer or complete compromise itself.” See also Jack B. Weinstein & Margaret A. Berger, Weinstein’s Federal Evidence § 408.03[5], at 408-13 (2d ed.2001).
¶24 When Hernandez filed his notice of claim against the state, he began settlement negotiations, as established by § 12-821.01. See Crum, 186 Ariz. at 352, 922 P.2d at 317. The notice therefore was a statement made in compromise negotiations and inadmissible under the second sentence of Rule 408.
¶25 Moreover, in his notice, Hernandez did not admit the validity of the state’s position; that it was not negligent. And the state certainly has not admitted it was negligent or the amount of Hernandez’s claim. See Advisory Committee Notes to Fed. R.Evid. 408 (rule triggered by dispute as to validity or amount of claim). When Hernandez filed his notice, it was entirely reasonable to expect the state to challenge the validity or amount of the claim. There was “an apparent difference of opinion.” Dallis, 768 F.2d at 1307. It was not necessary that the state specifically stake out a position contrary to Hernandez’s position. Accordingly, I conclude that when a claimant files a notice of claim pursuant to § 12-821.01, there is a dispute for purposes of Rule 408.7 Further, a notice of claim is a statement made in compromise negotiations because a person must disclose the basis for liability and the amount for which he or she will settle the claim, and the notice, therefore, triggers the negotiating process. § 12-821.01(A). Thus, the exclusionary principles of Rule 408 apply.
¶ 26 The remaining issue is whether, under Rule 408, factual statements concerning the facts of an accident made in compromise negotiations are admissible as prior inconsistent statements to impeach a party’s testimony. As noted above, statements made in compromise negotiations are not admissible to prove “liability for or invalidity of the claim or its amount.” Ariz. R. Evid. 408. But, such statements are admissible for “another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.” Id.
¶ 27 Impeachment of a party with a prior inconsistent statement concerning the facts of the accident is not necessary to prove bias and prejudice of a witness. A party is obviously biased by self-interest in favor of its own position. No further proof is necessary. And proof of bias and prejudice is different from impeaching credibility. A witness can lack credibility without bias or be credible even though biased. Moreover, the other examples stated in the rule are completely distinct. Accordingly, impeachment of a party does not come within the examples of exceptions given in Rule 408.
¶ 28 Additionally, impeachment of a party with a prior inconsistent statement concerning the facts of the case made during compromise negotiations is not the same type of “another purpose” as the examples listed in Rule 408. The examples in Rule 408 are not exclusive but merely illustrative of the types of other purposes that should be excluded fi-om rule’s protection. Each example involves issues collateral to the disputed claim. Thus, impeaching a party with a prior inconsistent statement about the facts of a claim is not the same type of “purpose” as the exceptions listed in Rule 408.
¶ 29 Furthermore, “ ‘[t]he clear import of the Conference Report as well as the general understanding among lawyers is that [inconsistent] conduct or statements [made in connection with compromise negotiations] may not be admitted for impeachment purposes.’” EEOC v. Gear Petroleum, Inc., 948 F.2d 1542, 1545 (10th Cir.1991) (offer of settlement letters “a thinly veiled attempt to get ... ’smoking gun’ letters before the jury”) (quoting M. Graham, Federal Rules of Evidence 116 (2d ed.1987)) (alterations added by court in EEOC). The bases for this conclusion are twofold. First, there is a significant danger that a jury will use impeachment *203evidence substantively, and, in that way, directly contravene Rule 408. See id. at 1546. “ ‘The danger that the evidence will be used substantively as an admission is especially great when the witness sought to be impeached ... is one of the litigants in the suit being tried.’ ” Id. (ellipses added) (quoting Jack B. Weinstein & Margaret A. Berger, Weinstein’s Evidence ¶ 408[05] at 408-34 (1991)); see also Schlossman & Gunkelman, Inc., 593 N.W.2d at 380 (“When the witness sought to be impeached is also a litigant, the admissibility of statements made during settlement negotiations increases the risk a jury may use the evidence substantively as an admission of liability.”); 2 John W. Strong et al., McCormick on Evidence § 266, at 186 (5th ed. 1999) (“Use of statements made in compromise negotiations to impeach the testimony of a party, which is not specifically treated in Rule 408, is fraught with danger of misuse of the statements to prove liability, threatens frank interchange of information during negotiations, and generally should not be permitted.”).
¶ 30 In fact, if the credibility of a party is impeached with a prior inconsistent statement concerning the facts of an accident, the only possible relevance of such evidence is to assist the jury in determining “liability for or invalidity of the claim or its amount.” Ariz. R. Evid. 408. A party’s credibility is not a separate issue required to be proven or dis-proven to prevail on any particular cause of action. Evidence concerning credibility merely assists the jury in determining which set of facts it should adopt, which will determine liability. Furthermore, a prior inconsistent statement may be considered as substantive evidence of the facts contained in it. See Ariz. R. Evid. 801(d); Joseph M. Livermore, Arizona Practice: Law of Evidence § 608.3(F) (4th ed.2000). When the statement is made by a party concerning the facts of the disputed claim, it will necessarily be used by the jury to determine validity of the claim. And, because here the facts were stipulated, the credibility of the plaintiff was only relevant to determine the amount of his damage, another purpose specifically excluded by Rule 408.
¶ 31 The second basis for concluding that statements concerning the facts of the accident made in compromise negotiations are not admissible to impeach a party is that a contrary conclusion undermines the purpose of Rule 408, which is to facilitate settlements by encouraging “free communication between parties.” Advisory Committee Notes to Fed. R.Evid. 408. “The philosophy of [Rule 408] is to allow the parties to drop their guard and to talk freely and loosely without fear that a concession made to advance negotiations will be used at trial.” Steven A. Saltzburg & Kenneth R. Redden, Federal Rules of Evidence Manual 286 (4th ed.1986); see also EEOC, 948 F.2d at 1545-46; Jack B. Weinstein & Margaret A. Berger, supra § 408.08[1], at 408-29 (2d ed. 2001) (“[C]are should be taken that an indiscriminate application of this ‘exception’ to Rule 408 does not result in undermining the rule’s public policy objective.”); Hjelmeset, 43 Clev. St. L.Rev. at 112. If such statements are admissible to impeach a party, the incentive to make those statements is greatly reduced and the purpose of Rule 408 is undermined.8 See EEOC, 948 F.2d at 1546; Saltzburg, supra. The majority opinion undermines the purposes of Rule 408.
¶ 32 The majority cites DeForest v. DeForest, 143 Ariz. 627, 694 P.2d 1241 (App.1985), for the general proposition that “impeachment evidence derived from compromise negotiations” may be admitted. In DeForest, the trial judge in a bench trial was called on to reconstruct a spousal maintenance agreement that had been previously approved by another judge but not set forth in a formal decree. In the process, the husband testified that he had “never been aware of [a spousal maintenance agreement in the amount suggested by the judge who had approved the agreement].” Id. at 633, 694 P.2d at 1247. And, the husband objected to the admission of a proposed decree, which he had signed, that included such an agreement because it *204was part of compromise negotiations. The trial court admitted the proposed decree for the limited purpose of showing the husband’s knowledge of it, but expressly noted it would not consider it as evidence of the terms of the ultimate agreement. In that context, the court of appeals held that the trial court was not required to exclude that evidence merely because it had been presented in the course of compromise negotiations. In contrast, the evidence here was admitted in a jury trial and it did involve the actual facts of the incident, the purpose for which the trial court in DeForest specifically stated the evidence would not be used. The majority’s decision today represents a significant expansion of the exception in DeForest.
¶33 Similarly, some of the other cases cited by the majority do not go so far as allowing a party’s statement concerning the facts of the case to be used for impeachment. Brocklesby v. United States, 767 F.2d 1288, 1292-93 (9th Cir.1985) (indemnity agreement between defendants admitted to show status of parties and to impeach credibility of defendants’ witnesses); Wyatt v. Security Inn Food & Beverage, Inc., 819 F.2d 69, 71 (4th Cir.1987) (upholding exclusion of settlement of two prior similar actions); Breuer Elec. Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182, 185 (7th Cir.1982) (settlement evidence was properly presented to rebut defendants’ assertion, in moving to set aside default, “that they had not been aware of the issues until the suit was filed”); Ozark Auto Transp., Inc. v. Starkey, 327 Ark. 227, 937 S.W.2d 175, 178 (1997) (court could not conduct “meaningful review of the merits of ... [Rule 408] issue” because letter not in record and abstracted portion did not contain settlement negotiations). But see Cochenour v. Cameron Sav. and Loan, F.A., 160 F.3d 1187, 1190 (8th Cir.1998) (supporting majority holding); Davidson v. Beco Corp., 114 Idaho 107, 753 P.2d 1253, 1255 (1987) (same); El Paso Elec. Co. v. Real Estate Mart, Inc., 98 N.M. 570, 651 P.2d 105, 108-09 (Ct.App. 1982) (same).
¶ 34 In sum, the majority’s construction will “eviscerate Rule 408.” Jane Michaels, Rule 408: A Litigation Mine Field, 19 No. 1 Litigation 34, 37 (1992). It presents a very real danger that a jury will use the evidence substantively for a purpose prohibited by Rule 408 and it significantly undermines the policy underlying Rule 408. In addition to undermining the purpose of Rule 408, the majority’s construction does not enhance the truth finding process. The majority focuses on false representations and, if the majority opinion were limited to instances of clear perjury, the public policy favoring ascertainment of the truth would militate in favor of the evidence’s admission. See Rule 102, Ariz. R. Evid. But the more likely victim of the majority’s interpretation of Rule 408 is the innocent claimant, or lawyer who is mistaken as to a fact at the very early stage of the process, such as in cases requiring a notice of claim to be file within 180 days, or the defendant whose attorney has and uses information from various sources that later prove to be incorrect. Penalizing this party will not enhance the truth finding process but will impede it.
¶ 35 Furthermore, under the majority’s construction, attorneys will likely revert to the common law practice of making hypothetical statements during compromise negotiations to avoid any future impeachment. See Advisory Committee Notes to Fed. R.Evid. 408. The purpose of the second sentence of Rule 408 is to eliminate this common law practice, which constituted “a preference for the sophisticated, and a trap for the unwary.” Advisory Committee Notes. In the alternative, attorneys will severely limit the facts and inflate the demand put in § 12-821.01 notices or claim and response correspondence, thereby frustrating the policies underlying it. And, because attorneys are often the ones to make statements during compromise negotiations, the majority’s construction creates a risk of causing the disqualification of a party’s attorney of choice so that he or she may be called as a witness to impeach the party or explain why a particular statement was made. See Hjel-meset, 43 Clev. St. L.Rev. at 110. Clearly, this would cause more harm than good to our adversarial system.
¶ 36 Finally, even under the majority’s construction, statements made in compromise negotiations that are offered to impeach a party’s testimony may still be excluded *205under Rule 403, Ariz. R. Evid. And I hope that trial courts will vigorously exercise their discretion to prevent admissibility of prior inconsistent statements by a party concerning the facts of the accident made in settlement negotiations. In conducting a Rule 403 analysis in this context, a trial court must “carefully balance the probative value of the evidence against the danger it will be used for an improper purpose within the context of the policies encouraging open and frank discussions during settlement negotiations and fostering the truth-finding process through the evaluation of a witness’s credibility.” Schlossman & Gunkelman, Inc., 593 N.W.2d at 380.9 The better practice is to exclude this type of impeachment in doubtful cases. See id. And, if it is admitted, a trial court must, upon request, and in other cases should offer an appropriate limiting instruction to the jury. See also Ariz. R. Evid. 105 (“When evidence which is admissible as to one party or for one purpose but not admissible as to another party or for another purpose is admitted, the court, upon request, shall restrict the evidence to its proper scope and instruct the jury accordingly.”).10 Such instructions are, of course, of limited practical value and the better practice remains exclusion of the evidence.
¶ 37 Based on the foregoing reasoning, I believe the better approach is to exclude statements made in settlement negotiations that are offered to impeach a party’s testimony. In my view, such a construction of Rule 408 better serves the purposes underlying the rule. Accordingly, I would reverse the trial court’s judgment.
CONCURRING: STANLEY G. FELDMAN, Justice.Pursuant to Ariz. Const. Article VI, Section 3, the Honorable Joseph W. Howard, Judge of the Court of Appeals, Division Two, was designated to sit on this case.
. Because Rule 408, Fed.R.Evid., is the source of Rule 408, Ariz. R. Evid., 17A A.R.S., see Historical Notes to Ariz. R. Evid. 408, and the two rules contain identical language, federal authority is instructive. See State v. Green, 200 Ariz. 496, ¶ 10, 29 P.3d 271, ¶ 10 (2001).
. If the notice is not protected by Rule 408, then any initial demand letter would similarly fall outside its protection, despite the perception of practicing attorneys that such letters are statements made in the course of negotiations and protected.
. Obviously, a plaintiff cannot avoid filing a notice of claim pursuant to A.R.S. § 12-821.01. But, under the majority’s construction, a plaintiff would be encouraged to disclose as little as possible. And, in the broader application of Rule 408, private parties would have less incentive to make full and frank statements during compromise negotiations.
. In the present case, for example, the facts were stipulated and the statement was used in argument to attack the credibility of the plaintiff, even though the statement was made by the plaintiff's lawyer and no foundation was laid to establish whether the statement was based on information obtained from the plaintiff, or was merely attributable to error or misconduct of counsel. Even litigants with careless or unethical lawyers are entitled to a fair hearing on the true facts.
. The majority likens this case to any other in which evidence is admitted for a limited purpose. Ante, at ¶ 15 n. 5. The difference is that, in cases involving statements made in compromise negotiations, the admission for the limited purpose undermines the goal of Rule 408 of allowing free and open settlement negotiations.