ARIZONA STATE SENATE
Phoenix, Arizona
Shifts primary motor vehicle liability insurance coverage from a rental car company’s policy to the driver’s policy.
Under current Arizona law an owner of a vehicle must maintain motor vehicle liability insurance coverage on each vehicle they own. This coverage follows the vehicle, not the driver.
The liability insurance coverage that rental car companies are required to carry on every car they own is primary (pay first) in the event of a loss. The driver’s policy is considered excess (pay second) if the rental company's liability coverages are insufficient to cover the loss. Liability insurance typically covers injuries and property damages in the event of a loss.
For physical damages to the rental vehicle, some insurance carriers allow the comprehensive and collisions coverage of the driver’s automobile policy to apply to the rental vehicle. In addition, rental agents can offer a supplemental insurance policy that covers physical damages to the rented vehicle.
S.B. 1098 assigns the driver of a rented vehicle’s liability insurance policy to primary coverage and assigns the liability insurance of the rental company as excess coverage in the event of a loss. Arizona law currently extends similar liability assignments to auto dealerships.
In addition, the bill requires that rental agencies selling insurance in conjunction with rental agreements to conspicuously post a statement detailing renter liability and insurance coverage related to the rental of motor vehicles.
1. Assigns the motor vehicle liability insurance of the operator of a rented vehicle, when at a time of loss the motor vehicle is not being used for businesses of the owner/rental agent, to primary insurance coverage.
2. Assigns the motor vehicle liability insurance of the agent, when at a time of loss the motor vehicle is not being used for businesses of the owner/rental agent, to excess insurance coverage.
3. Specifies that the motor vehicle liability insurance of the owner/rental agent is primary when the driver of a rented vehicle is not covered by a policy of insurance.
4. Requires rental car agents to conspicuously post a statement detailing renter liability and insurance coverage relating to the rental of motor vehicles.
5. Contains technical changes.
6. Provides for a general effective date.
Prepared by Senate Staff
February 5, 2002