NAII States Ariz. Bill Would Benefit Rental Car Cos., Increase Other Auto Coverages

According to the National Association of Independent Insurers, rental car companies would be the only beneficiaries of a bill to shift insurance responsibility now moving through the Arizona Legislature.

Under current Arizona law — and the law of most states — the owner of a rental car must maintain public liability insurance on that vehicle and that insurance responds first in the case of any accident. The renter’s insurance is excess coverage.

The NAII commented that HB 2072 would reverse Arizona’s long-standing rental car insurance system by flip-flopping the requirement that a rental car owner’s liability insurance coverage is primary and a driver’s insurance coverage is secondary.

“This legislation would reduce the expenses of the rental car agency and increase the cost of automobile insurance coverage for Arizona consumers,” NAII Local Counsel David Childers wrote in a letter to legislators debating this issue. “Specifically, it would transfer the cost of rental car liability losses from the rental car company to the driver’s insurance policy.

If this legislation advances, rental car companies would be the only business in this state not required to maintain primary liability insurance on their vehicles, Childers added.”

Drivers who rent cars assume the cost of liability coverage is part of their rental fee. HB 2072 would transfer the cost associated with rental car liability coverage from the rental car agency to every motorist who purchases private passenger automobile insurance coverage, regardless if they rent cars in Arizona, according to Childers.

“It is sound public policy to require that any business entity provide liability coverage for its own vehicles,” Childers said.

The Arizona House Financial Institutions & Insurance Committee will hear arguments, including NAII testimony, on the legislation today. It is not expected to vote on the measure until next week.

Topics Auto Legislation Arizona