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Arizona Auto Insurance & Crash Law · Citizen Guide 13
Borrowed & Rental Vehicles
A crash involving a vehicle the driver does not own can activate several overlapping insurance systems. Arizona treats an ordinary borrowed car, conventional rental vehicle, dealer loaner and peer-to-peer shared car differently, so the vehicle relationship must be identified before determining coverage.
First identify what kind of non-owned vehicle was involved
Friend, neighbor or family member permits another person to use the owner's vehicle.
Commercial rental company provides the vehicle under a rental agreement.
Vehicle supplied temporarily by a dealership, garage or motor-vehicle business.
Privately owned vehicle made available through a statutory car-sharing platform.
For an ordinary borrowed car, begin with the vehicle owner's policy
Arizona's omnibus statute protects qualifying permissive users of a vehicle covered by the owner's motor-vehicle liability policy.
Named insured
The owner's liability policy protects the person named as the insured for liability arising from the covered vehicle.
Permissive user
The policy must also protect another person using the covered vehicle with the named insured's express or implied permission.
Permission can be express or implied
- direct permission to take the vehicle
- regular family usage
- prior unrestricted borrowing
- possession of keys
- employment practices
- purpose for which vehicle was furnished
- restrictions imposed by owner
- whether permission was exceeded
Arizona generally makes insurance on the owned vehicle primary
A.R.S. §28-4010(B) provides a statutory priority rule when two or more valid and collectible liability policies apply to the same vehicle.
The driver's own policy may provide another coverage layer
Personal automobile policies frequently contain coverage for certain vehicles not owned by the insured.
Temporary substitute
A vehicle temporarily replacing an insured vehicle because of repair, breakdown, servicing or another specified condition.
Non-owned auto
A vehicle the insured does not own that satisfies the policy's definition and use requirements.
Read the definitions carefully
- named insured
- family member
- non-owned automobile
- temporary substitute automobile
- regular-use exclusion
- permission requirement
- business-use restriction
- rental-vehicle language
- other-insurance clause
Insurance coverage does not automatically make the vehicle owner personally liable
A permissive driver can qualify as an insured under the owner's liability policy even when the owner is not personally liable for the driver's negligence.
Insurance question
Does the policy protect the permissive driver against the driver's own liability?
Tort question
Is there an independent legal basis to impose liability on the vehicle owner?
Possible owner-liability theories
Negligent entrustment
Did the owner negligently entrust the vehicle to an incompetent or unsafe driver under the circumstances?
Agency / employment
Was the driver acting as the owner's employee or agent?
Family purpose
Does Arizona's family purpose doctrine impose vicarious liability in the household relationship presented?
Commercial rental vehicles operate under a separate Arizona statute
A.R.S. §28-2166 establishes financial-responsibility and claims rules for owners engaged in renting vehicles without drivers.
| §28-2166 protection | Minimum stated in current statute |
|---|---|
| One person bodily injury/death | $15,000 |
| Two or more persons bodily injury/death | $30,000 |
| Property damage | $10,000 |
Primary coverage is the statutory starting point
Subject to the statute's exceptions, the rental owner's liability insurance or statutory self-insurance obligation is primary to other available liability coverage.
The rental agreement can change the priority analysis
Section 28-2166 allows a rental owner to use a prescribed disclosure stating that it does not extend its financial responsibility or provide public liability coverage to the renter or drivers.
Obtain the entire agreement
- renter identity
- authorized drivers
- insurance disclosure
- affirmative acknowledgments
- supplemental liability election
- physical-damage election
- prohibited uses
- driver restrictions
- return date and time
- master rental agreement
- online reservation terms
Arizona gives rental companies a specific twenty-day claims-information obligation
Under §28-2166(D), a rental owner can become obligated to respond to the third-party claim, provide the statutory financial responsibility and defend if specified conditions exist.
No other applicable renter liability coverage
The rental statute's protection and defense mechanism becomes important when no other available and applicable liability coverage exists.
Rental owner fails to provide insurance information
Within twenty days after notice of the claim, the owner must fully and accurately provide specified renter and insurer information or face the statutory consequence.
The information includes
- renter's name;
- renter's address;
- applicable insurance company; and
- policy number or insurer claim number.
Rental-counter insurance can add separate protection
A.R.S. §20-331 permits licensed rental car agents to offer insurance incidental to the rental transaction.
Supplemental liability
Additional liability protection for renters and authorized drivers.
UM/UIM
Rental insurance products may include uninsured or underinsured motorist protection.
Physical damage
Protection concerning loss or damage involving the rental vehicle itself, according to the product terms.
The Graves Amendment limits rental-company owner liability—but does not eliminate insurance duties
Federal law, 49 U.S.C. §30106, generally protects a qualifying rental or leasing company from liability imposed solely because it owns the vehicle.
Mere ownership liability
A qualifying rental company generally cannot be made vicariously liable solely because its vehicle was involved in the driver's crash.
Rental company's own wrongdoing
The federal statute does not immunize the rental owner from its own negligence or criminal wrongdoing.
A dealer or repair-shop loaner uses a special primary/excess rule
A.R.S. §28-4010(A) applies where insurance covers a person or business engaged in selling, repairing, servicing, delivering, testing, parking or storing motor vehicles.
| Who is operating vehicle? | Primary | Excess |
|---|---|---|
| Dealer/shop or its employee/agent | Motor-vehicle-business policy | Other applicable insurance |
| Customer or other non-business operator | Other insurance available to operator | Motor-vehicle-business policy |
Peer-to-peer car sharing has its own Arizona insurance code
Arizona regulates peer-to-peer car sharing under A.R.S. §§28-9601 through 28-9616.
Required primary insurance
During each car-sharing period, the statute requires qualifying liability insurance at least equal to §28-4009 minimums.
Owner, driver or platform
The required insurance can be maintained by the owner, shared driver, platform or a combination of those sources.
Platform insurance
If relied-upon owner or driver insurance lapses or does not provide required protection, qualifying platform insurance supplies the statutory coverage from the first dollar and can carry a duty to defend.
Personal-policy exclusions allowed
Arizona expressly permits personal insurers to exclude broad categories of coverage during the car-sharing transaction.
The owner's personal policy may exclude nearly everything during sharing
Section 28-9604 permits exclusions encompassing:
- bodily-injury liability
- property-damage liability
- UM
- UIM
- MedPay
- comprehensive
- collision
For car sharing, exact beginning and ending times matter
Section 28-9609 requires car-sharing agreements to warn that platform insurance applies only during the defined car-sharing period.
Preserve
- reservation timestamp
- car-sharing start time
- scheduled termination time
- actual return time
- platform app records
- vehicle access records
- GPS data
- agreement version
Build the complete insurance stack before deciding who pays
Borrowed and rental vehicle workflow
Borrowed / rental vehicle document checklist
- vehicle registration
- title information
- owner's declarations page
- owner's complete policy
- driver's declarations page
- driver's complete policy
- umbrella policies
- rental agreement
- master rental agreement
- authorized-driver list
- online reservation records
- insurance disclosure
- supplemental liability election
- physical-damage election
- credit-card benefit terms
- travel insurance terms
- dealer loaner agreement
- repair order
- car-sharing agreement
- sharing-period records
- platform insurance policy
- app / timestamp data
- permission communications
- texts between owner and driver
- employment records if applicable
- business-use evidence
- coverage letters
- reservation-of-rights letters
- coverage denials
Common borrowed and rental vehicle mistakes
“Insurance always follows the driver.”
Arizona's ordinary liability priority rule often makes the policy on the owned vehicle primary.
“Insurance always follows the car.”
Also too broad. Dealer loaners, rentals and peer-to-peer sharing have special statutory systems.
“Permission from the renter guarantees the renter's personal policy covers me.”
Odom demonstrates why the actual non-owned-auto definition must be read.
“The rental company must always provide primary liability coverage.”
Current §28-2166 contains prescribed disclosures and exceptions that can change the priority.
“Graves means the rental company has no insurance obligation.”
Wrong. Federal law expressly preserves state financial-responsibility and insurance standards.
“A peer-to-peer rental is just borrowing a friend's car.”
Arizona has a separate statutory insurance system and expressly permits personal-policy exclusions during car sharing.
Arizona authority map
Frequently asked questions
If I borrow a friend's insured car in Arizona, am I generally covered?
Arizona's owner's-policy statute generally requires liability protection for a person using the covered vehicle with the named insured's express or implied permission, subject to lawful exclusions and the actual policy.
Whose liability insurance is usually primary on an ordinary borrowed car?
Under A.R.S. §28-4010(B), the policy in which the vehicle is described or rated as an owned automobile is generally primary, with other applicable liability insurance excess.
Does my personal auto policy cover every rental car I drive?
Do not assume so. Read the policy's non-owned-auto, temporary-substitute, permission, regular-use and other applicable definitions and exclusions.
If I rent a car and let a friend drive it, is my personal policy automatically responsible?
No. Odom demonstrates that the personal policy's non-owned-auto definition can restrict who receives coverage when using the rental vehicle.
Is the rental company's insurance always primary in Arizona?
No. Section 28-2166 begins with a primary-coverage rule but contains statutory exceptions involving prescribed rental-agreement disclosures and purchased rental liability insurance.
Why does the rental statute still show 15/30/10 when ordinary Arizona minimums are 25/50/15?
Section 28-2166 is a specialized rental-vehicle statute with its own stated amounts. Section 28-4009 governs ordinary motor-vehicle liability policy minimums. The two statutory systems should not be conflated.
What information must an Arizona rental company provide after a crash?
Section 28-2166 creates a twenty-day mechanism involving the renter's name, address, applicable insurer and policy number or claim number. Failure to provide the specified information can trigger additional statutory duties for the rental owner.
Does the Graves Amendment mean I cannot ever sue a rental company?
No. It generally bars liability based solely on rental-company ownership of the vehicle. It does not immunize the company's own negligence or erase Arizona financial-responsibility obligations.
Is rental collision protection the same as liability insurance?
No. Liability protection concerns injury or damage caused to others. Collision, physical-damage or loss-damage protection concerns the rented vehicle itself according to the governing terms.
Whose policy is primary when I drive a dealership or repair-shop loaner?
Arizona has a special rule. When a customer rather than the motor- vehicle business or its employee is driving, the business policy is generally excess to other insurance available to the operator.
Is a peer-to-peer shared car treated like borrowing a friend's car?
No. Arizona has a separate statutory car-sharing system requiring primary insurance during the sharing period and expressly allowing personal insurers to exclude coverage for sharing activity.
Can the owner's personal policy exclude a peer-to-peer car-sharing loss?
Yes. A.R.S. §28-9604 expressly permits broad exclusions, including liability, UM/UIM, MedPay, comprehensive and collision.
Identify the vehicle relationship before deciding which insurance follows it.
Find the vehicle owner, the driver's authority to use it, every policy on the vehicle, every policy protecting the driver, and every rental, dealer or sharing agreement. Then apply the Arizona statute governing that particular vehicle relationship and determine which applicable coverage is primary, excess or excluded.