Ariz. Bill Pits Personal Car Insurers Against Rental Car Agencies

The Arizona Senate may soon get to vote on a bill already approved by the Banking and Insurance Committee that would greatly reduce rental car agencies’ liability for damages caused by renters and would shift that burden to renters’ own personal policies.

The bill is–not surprisingly–getting strong support from rental car agencies and is seeing equally strong opposition from personal auto insurers.

Arizona rental agencies all currently have to provide liability coverage on their cars for any damages that renters cause while behind the wheel, and that wouldn’t change under the bill, SB 1286.

What would change under the bill is that the policies provided by the agencies would be considered secondary. That means any damages Arizonans cause behind the wheel while driving a car rented in the state would be covered by the renter’s policy first, and the agency’s policy would kick in only if the renter’s policy limits were exceeded.

That means a lot more claims involving rental cars would be filed under renters’ own personal policies rather than the agencies’ commercial coverage.

Rental car agencies’ coverage would also kick in if the renter had no policy at all.

Representatives from a handful of auto insurance companies in the state–including major carriers like State Farm, Allstate, Farmers and Liberty Mutual–have testified in opposition of the legislation.

According to the Property Casualty Insurers Association of America (PCI), the legislation could shift accident costs to private insurers and result in premium increases for the average Arizona driver.

“This change would result in a cost shift of millions of dollars to the private insurance market and could raise insurance costs for all Arizonans with auto insurance, whether or not they even rent a car,” PCI said in a statement regarding the legislation.

When the Senate committee approved the bill, it did so on a 4-2 vote.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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