STATUTE OF LIMITATIONS
- Personal Property2 YearsA.R.S. § 12-542
- Personal Injury/Death2 YearsA.R.S. § 12-542
- Breach of Contract/Written6 YearsA.R.S. § 12-548
- Breach of Contract/Oral3 YearsA.R.S. § 12-543
- Breach of Contract/U.C.C./Goods4 YearsA.R.S. § 47-2725
- Statute of Repose/ProductsN/AN/A*
- Statute of Repose/Real Property)8 YearsA.R.S. § 12-552**
- Breach of Warranty4 YearsA.R.S. § 47-2725
- Workers’ Compensation2 YearsA.R.S. § 23-1023(D)
Statute of Limitations Exceptions
*8 Years from substantial completion of improvement to real property; 9 years if defect is discovered in the 8th year. A.R.S. § 12-552.
**None. Previous Statute of Repose was 12 Years after original sale. However A.R.S. § 12-551 was declared unconstitutional in Hazine v. Montgomery Elevator, 861 P.2d 625 (Ariz. 1993).
Contributory Negligence/Comparative Fault
Pure Comparative Fault. Damaged parties can recover even if 99% at fault. Plaintiff’s awarded damages will be reduced by his share of the fault. A.R.S. § 12-2505.
Med Pay/PIP Subrogation
Med Pay and PIP. No direct subrogation right. Assignment of personal injury cause of action is prohibited. Allstate Ins. Co. v. Druke, 576 P.2d 489 (Ariz. 1978). Carrier can perfect lien against any third-party recovery for Med Pay benefits in excess of $5,000 by recording lien within 60 days after payment with the office of the county recorder where the accident occurred. A.R.S. § 20-259.01(J). Copies of lien with relevant info must be sent to insured and all third parties. The two year personal injury statute of limitations runs from the date of the accident. A.R.S. § 12-542. The two year statute of limitations for UM subrogation runs from the date of first payment. A.R.S. § 12-555(D).
Automobile: Pro-Rata. Ariz. Admin. Code § R20-6-801(H)(4). “Insurers shall, upon claimant’s request, include first-party claimant’s deductible, if any, in subrogation demands. Subrogation recoveries shall be shared on proportionate basis with first-party claimant, unless deductible amount has been otherwise recovered. No deduction for expenses can be made from deductible recovery unless outside attorney is retained to collect such recovery. The deduction may then be for only pro-rata share of allocated loss adjustment expense.”
An insurer is not required to add an insured’s deductible or uninsured loss to its subrogation action; maintaining two separate suits (i.e., one by insured and another by insurer) is not considered a “splitting of actions.” Commercial Union Ins. Co. v. Lewis & Roca, 902 P.2d 1354 (Ariz. 1995).
Deductible must be included in any subrogation demand.
Made Whole Doctrine
Arizona law does not discuss application of the Made Whole Doctrine in the subrogation context. It does mention and apply the somewhat similar Doctrine of Superior Equities in a suretyship situation, however. Liberty Mutual Ins. Co. v. Thunder Bank, 555 P.2d 333 (Ariz. 1976). The 9th Circuit (which includes Arizona) has adopted the Made Whole Doctrine into federal common law as the default rule with regard to health insurance subrogation. Barnes v. Indep. Auto Dealers Ass’n of Cal. H&W Ben. Plan, 64 F.3d 1389 (9th Cir. 1995). Therefore, under federal common law in the 9th Circuit, absent language to contrary in the Plan, a health Plan cannot enforce its subrogation rights unless the Plan beneficiary is fully compensated and made whole for his or her injuries. Id. Of course, that deals with federal law. Note, however that with regard to Med Pay subrogation, § 20-259.01(J) requires an insurer to compromise its Med Pay lien in a “fair and equitable manner.”
Economic Loss Doctrine
Intermediate Rule. The ELD bars recovery in tort for damage only to a defective product (i.e., economic losses such as repair costs, diminished value, or lost profits), provided there is no damage to person or other property. Three factors must be looked at to determine whether contract or tort law provides the remedy for a product defect which causes damage to the product only: (1) the nature of the product defect that caused the loss to the plaintiff; (2) the manner in which the loss occurred; and (3) the type of loss for which the plaintiff seeks redress. Salt River Project Agric. Improvement & Power Dist. v. Westinghouse Elec. Corp., 694 P.2d 198 (Ariz. 1984) (unreasonable risk of harm), abrogated on other grounds by, Phelps v. Firebird Raceway, Inc., 111 P.3d 1003 (Ariz. 2005). If a defect causes a product to malfunction and the malfunction affects the product which catches on fire and is completely destroyed, the property damage to the product itself would be recoverable in strict tort liability action, since the defect would be unreasonably dangerous to person or property and cause accidental damage to other property. Salt River Project, supra. A plaintiff may recover under tort theory if the loss was the result of an unreasonably dangerous defect in the product supplied by the manufacturer and the loss occurred by fire in a sudden accident which was of the type which could endanger persons and other property. Salt River Project, supra. The gist of a products liability tort case is not that the plaintiff failed to receive the quality of product he expected, but that the plaintiff has been exposed, through a hazardous product, to an unreasonable risk of injury to his person or property. Cloud v. Kit Manufacturing, 563 P.2d 248 (Ariz. 1977) (losses resulting from a sudden accident and those occurring from a slow process of deterioration). However, where economic loss is accompanied by damage to other property, strict tort liability applies. Salt River Project, supra. When a construction defect causes only damage to the building itself, or other economic loss, common law contract remedies alone provide relief. Travelers Indem. Co. v. Crown Corr, Inc., 2011 WL 6780885 (D. Ariz. 2011). Damage to speakers in a stadium being constructed was not considered “other property” such as to fall within the exception to the ELD. Salt River Project Agr. Imp. and Power Dist. v. Westinghouse Elec. Corp., 694 P.2d 198 (Az. 1984).
Arizona has avoided per se rules and has taken a more flexible case-by-case approach, holding that a tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. General Accident Fire & Life Assurance Corp. v. Traders Furniture Co., 401 P.2d 157 (Ariz. App. 1981).
Independent Tort Action: Arizona does not recognize an independent claim for either negligent or intentional spoliation of evidence. Tobel v. Travelers Ins. Co., 988 P.2d 148, 156 (Ariz. App. 1999).
Sanctions/Adverse Inference: Generally speaking, innocent failure to preserve evidence does not warrant sanction or dismissal. Souza v. Fred Carriers Contracts, Inc., 955 P.2d 3, 6 (Ariz. App. 1997). However, litigants have a duty to preserve evidence which they know or reasonably should know is relevant or reasonably calculated to lead to the discovery of admissible evidence and likely to be requested during discovery or the subject of a pending discovery request. Id.
Issues concerning destruction of evidence and appropriate sanctions therefore should be decided on a case-by-case basis, considering all relevant factors. Id. In doing so, the court noted the destruction of potentially relevant evidence occurs along a continuum of fault and the resulting penalties should vary correspondingly. Id., quoting Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir. 1988).
Willful Misconduct. A parent is liable for a child’s willful or malicious damage to person or property, including theft or shoplifting. A.R.S. § 12-661.
Minor Driving. If minor is guilty of negligence or willful misconduct while driving a motor vehicle, liability will be imputed to the person who signed the minor’s application for a drivers’ license. A.R.S § 28-3160.
Child must be under 18-years-old. Parent’s liability is limited to $10,000.
Pure Several Liability. Generally, defendants are held severally liable, except when tortfeasors are acting in concert or there is an issue of vicarious liability. A.R.S. § 12-2506; Yslava v. Hughes Aircraft Co., 936 P.2d 1274 (Ariz. 1997).
Arizona adopted a pure comparative fault tort system as part of its enactment of the Uniform Contribution Among Tortfeasor’s Act (“UCATA”), A.R.S. § 12-2501, et seq. Since 1988, the doctrine of joint and several liability has been abolished making contribution actions rare under the statute. Bill Alexander Ford v. Casa Ford, 931 P.2d 1126 (Ariz. App. 1996). No right of contribution when a single tortfeasor settles a plaintiff’s claim against him.
Unless acting in concert or hazard wastes involved. There is no right of contribution where a settling defendant’s liability is several only. Contribution is allowed only in rare instances where joint and several liability. PAM Transport v. Freightliner Corp., 893 P.2d 1295 (Ariz. 1995).
Equitable contribution (arising without regard to the contribution statute) is still viable. Mut. Ins. Co. v. American Cas. Co., 938 P.2d 71 (Ariz. 1996).
The statute of limitations is three (3) years from date of payment or judgment. A.R.S. § 12-541.
Suspension of Drivers' Licenses
Administrative Suspension: In the event that there is no insurance coverage, it is necessary to file a civil suit with the Clerk of the Superior Court and obtain a judgment against the uninsured tortfeasor. A.R.S. § 28-4141. Failure to produce proof of insurance may result in suspension of the driver’s license and/or registration for three (3) to twelve (12) months. A.R.S. § 28-4135.
Judgment: A damaged party or subrogated insurer can file a certified copy of a final judgment with the department, and the director must immediately suspend the individual’s license. A.R.S. § 28-4072. The license will remain suspended until the judgment is satisfied or if the judgment creditor fails to renew the judgment. A.R.S. § 12-1611.
Contact Information: Arizona Dept. of Transportation, Motor Vehicle Division, Mail Drop 555M, Insurance Unit, P.O. Box 2100, Phoenix, AZ 85001-2100, (602) 255-0072, http://www.azdot.gov/mvd/index.asp.
Prohibits Broad Indemnity for private contracts. Prohibits Intermediate Indemnity for public contracts. Prohibits Additional Insureds for public contracts. Applies to Construction or Architect / Engineer Contracts. A.R.S. §§ 32-1159, 34-226, 41-2586.
Exception to all three statutes: Subcontractor (indemnitor) may indemnify person not a party to the construction contract and who, as an accommodation, enters into an agreement with the subcontractor that permits the subcontractor to enter on or adjacent to its property to perform the construction contract for others.
Diminution of Value
First Party: Arizona does not allow for first-party recovery, as the courts have determined that an insured’s measure of damages is not the difference in the market value of the auto immediately before and after the collision. Johnson v. State Farm Mut. Auto. Ins. Co., 754 P.2d 330 (Ariz. App. 1988).
Third Party: Courts agree with jurisdictions that have “generally held that the measure of compensation to the owner of a negligently damaged motor vehicle may include the cost of repair and proven residual diminution in fair market value.” Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 138 Ariz. 562, 564, 675 P.2d 1381, 1383 (Ariz. Ct. App. 1983). “When the property is repaired or restored, however, the measure of damages includes the cost of repair with due allowance for any difference between the value of the property before the damages and the value after repairs, as well as the loss of use.” Oliver v. Henry, 227 Ariz. 514, 516-17, 260 P.3d 314, 316-17 (Ct. App. 2011) (citing Restatement (Second) of Torts § 928 (1977)).
One-Party Consent: An individual not involved in or present during a communication must have the consent of at least one party to record an electronic or oral communication. Arizona also permits a telephone “subscriber” (the person who orders the phone service and whose name is on the bill) to tape (intercept) calls without being a party to the conversation and without requiring any notification to any parties to the call. Ariz. Rev. Stat. Ann. § 13-3012(9); § 13-3012(5)(c).
An Arizona court can award criminal restitution, to be paid by the defendant, to not only the person directly harmed by a defendant, but also to “any person who suffered an economic loss caused by the defendant’s conduct.” A.R.S. § 13-804.
Arizona courts have recognized that if the individual immediately affected by the defendant’s conduct has their losses paid by an insurer, they have not suffered an “economic loss” under the statute. Therefore, the insurance company indemnifying their insured for losses as a result of a defendant’s criminal conduct is in the same position of economic loss their insured. State v. Morris, 839 P.2d 434 (Ariz. App. 1992). An insurance company can be classified as a victim under Arizona case law.
Health and Disability Insurance
Statute of Limitations: 2 Years. A.R.S. § 12-542.
Subrogation of Medical and Disability Benefits are not allowed. Piano v. Hunter, 840 P.2d 1037 (Ariz. App. 1992).
Funeral Procession Traffic Laws
The law allows a funeral escort vehicle driver holding a class D driver’s license and exhibiting a red or red and blue light to (1) direct the vehicles in the procession and other vehicles approaching the procession to stop, proceed, or make any necessary movements without regard to any traffic control device, and (2) exceed the speed limit by up to 15 miles per hour to overtake the procession so it can direct traffic at the next intersection. All other vehicles and pedestrians, except emergency vehicles, must yield the right-of-way to funeral processions. Vehicles in the procession must exercise due care. Ariz. Rev. Stat. § 28-776.
Statute of Limitations: 2 Years. A.R.S. § 23-1023(D).
Can Carrier Sue Third Party Directly: Yes, after 1 year.
Recovery from UM/UIM Benefits: No.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: No.
Recovery Allocation/Equitable Limitations: (1) Litigation Costs; (2) Employer Reimbursement; (3) Balance to Plaintiff.
Employer Contribution/Negligence: No, the contribution lien is reduced by the percentage of the employer’s fault determined by jury (trial, not settlement).
Attorney’s Fees/Costs: No, the lien is not subject to reduction for attorney’s fees.
Future Credit: Yes, the lien is also reduced by the employer’s percentage of fault.
Auto No-Fault: No.
Dog Bite Laws
No “One Bite” Rule. Owner strictly liable for bites occurring while dog is at large (§ 11-1020) or while in a public place (§ 11-1025). Only defense is provocation. Ariz. Rev. Stat. §§ 11-1020, 11-1025, 11-1026.
Employee Leasing Laws
Arizona’s statute dictates that a professional leasing organization is given protection under the Exclusive Remedy Rule as a co-employer of the worker. A.R.S. § 23-901.08. However, in order to be given immunity under the Exclusive Remedy Rule, the parties must be in compliance with various regulations and rules regarding employee leasing.
Condominium Waiver of Subrogation Laws
Associations must maintain property and liability insurance, but the insurance policy must waive subrogation against a unit owner or member of the household of a unit owner. A.R.S. § 33-1253(d)(2).
Automobile Total Loss Thresholds
Total Loss Formula (See here for definition).
Insurer determines if it is uneconomical to repair vehicle. It then is a salvage vehicle. A.R.S. § 28-2091(T)(4).
Sudden Medical Emergencies While Driving
Sudden Incapacitation Defense. If some unforeseen emergency or Act of God occurs which overpowers the judgment of the driver, or renders him incapable of control, so he is not capable of independent action or controlling a motor vehicle, and as a result injuries are inflicted upon another or his property, then such driver is not negligent. Goodrich v. Blair, 646 P.2d 890 (Ariz. App. 1982); Garcia v. Saavedra, 2015 WL 2412106 (Ariz. App. 2015).
Loss of control of vehicle must (1) be caused by a physical incapacitation, and (2) have occurred suddenly and unforeseeably. Pac. Employers Ins. Co. v. Morris, 275 P.2d 389 (1954).
State Sovereign Immunity And Tort Liability
Tort Claims Act: Actions Against Public Entities or Public Employees Act. Public entities are granted absolute immunity for the exercise of a judicial, legislative, or discretionary function. A.R.S. § 12-820.01 (1984).
Notice Deadlines: All actions against public entities or public employees shall be brought within one year after the cause of action. A.R.S. § 12-821. Claims against the State shall be filled within 180 days after the action occurs. A.R.S. § 12-821.01.
Claims/Actions Allowed: A public entity is not liable for losses that arise out of an act or omission determined to be a criminal felony by a public employee unless the public entity knew of the employee’s propensity for that action. This subsection does not apply to acts or omissions arising out of the operation or use of a motor vehicle. A.R.S. § 12-820.05.
Comments/Exceptions: If absent proof of a public employee’s gross negligence or intent to cause injury, public entities have qualified immunity for:
(1) The failure to make an arrest or to retain an arrested person;
(2) An injury to the driver of a vehicle that is caused by a violation by another driver; and
(3) Preventing the sale of a handgun to a person who may lawfully possess a handgun, etc.
See A.R.S. § 12-820.02 for other exceptions.
Damage Caps: None.
No law shall limit the amount of damages to be recovered for causing the death or injury of any person. Ariz. Const. Art. II, § 31. No punitive damages against the State. A.R.S. § 12-820.04.
Recovery of Sales Tax After Vehicle Total Loss
First-Party Claims: All insurance policies must make prompt, fair, and equitable settlements applicable to both first and third-party total loss claims. This includes either (1) offering a replacement auto with all applicable “taxes, license fees, and other fees” paid, or (2) making cash settlement which includes all applicable taxes, license fees, and other fees. Ariz. Admin. Code § R20-6-801(H)(1).
Third-Party Claims: Third-party insurers must follow the same rules as first-party insurers. Any deviation from those rules must be supported by documentation giving particulars of the vehicle’s condition, and all deviations must be “measurable, discernible, itemized, and specified as to dollar amount.” Ariz. Admin. Code § R20-6-801(H)(1)(C).
Damage to Property Without Market Value
Service Value: “He [judge] may consider the cost of the property when new, the length of time it was used, its condition at the time of loss or injury, the expense to the owner of replacing it with another item of like kind and in a similar condition, and any other factors that will assist in assessing the value to the owner at the time of the loss or injury.” Devine v. Buckler, 603 P.2d 557 (App. 1979).
Intrinsic Value: “If goods have no market value, their actual worth to the owner is the test.” Devine v. Buckler, 603 P.2d 557 (Ariz. Ct. App. 1979).
Sentimental Value: “…the trial court … instructing the jury on the measure of damages would be the actual value, based on money loss, of the goods converted, plus interest, but excluding any sentimental or fanciful value, expressly stating the damages could in no case exceed the actual value of the goods, as pleaded by the plaintiff in her complaint.” Jones v. Stanley, 233 P. 598 (Ariz. 1925).
Municipal/County/ Local Governmental Immunity and Tort Liability
Actions Against Public Entities or Public Employees Act: Public entities are granted absolute immunity for the exercise of a judicial, legislative, or a discretionary function. A.R.S. § 12-820.01 (1984). “Public entity” means the state or any political subdivision of the state. A.R.S. § 12-820(7).
Notice Deadlines: All actions against public entities or public employees shall be brought within one (1) year after the cause of action. A.R.S. § 12-821. Claims against the State shall be filled within 180 days after the action occurs. A.R.S. § 12-821.01. Deemed denied if no response within 60 days.
Claims/Actions Allowed: Liability determined by nature of act performed.
Policymaking vs. Operational: Operational acts concern routine, everyday matters not involving broad policy factors. Policymaking acts involve whether one general course of action over another.
Comments/Exceptions: Absolute immunity granted for (1) Judicial/Legislative functions; and (2) Administrative functions involving government policy. A.R.S. § 12-820.01(A) (No Easy Test). Unless there is gross negligence, qualified immunity granted for actions listed in § 12-820.02(A).
Damage Caps: None. No law shall limit the amount of damages to be recovered for causing the death or injury of any person. Ariz. Const. Art. II, § 31. No punitive damages against the State. A.R.S. § 12-820.04.
Laws Regarding Using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: Ariz. Stat. § 28-914. The new law becomes effective on January 1, 2021. It prohibits the following use of cell phones: (1) holding a cell phone in any way while talking on the phone, including propping it up with a shoulder; (2) watching any kind of video or recording a video, and (3) writing, sending, or reading any text-based communication including a text, instant message or e-mail.
Other Prohibitions: None.
Comments: The following cell phone use is allowed in Arizona while driving: swiping a phone screen to make or accept a phone call. using a handheld cell phone to call 911, talking on the phone if using an earpiece, headphone device or device worn on a wrist, using voice-based communication, such as a talk-to-text function, using a handheld cell phone while stopped at a traffic light or stoplight, and using a GPS system.
Workers’ Compensation Claims by Undocumented Employees
Statute: The term “employee” includes “aliens.” Ariz. Rev. Stat. § 23-901(6)(b).
Case Law: State court ruling of limited precedential value. Tiger Transmissions v. Industrial Commission of Arizona, No. 1 CA-IC 02-0100 (May 29, 2003).
Comments/Explanation/Other: The term “employee” includes “aliens and minors legally or illegally permitted to work for hire.”
Admissibility of Expert Testimony
Admissibility Standards: Daubert
Case/Statutory Law: A bill (2010 Legis. Bill Hist. AZ H.B. 2492) was introduced to adopt Daubert standard. It became § 12-2203, which requires expert opinions to be “the product of reliable principles and methods” and requires experts to have “reliably applied the principles and methods to the facts of the case.” It also requires courts to apply the Daubert standard.
Frye/Logerquist is no longer the standard governing the admissibility of expert testimony in Arizona; the Daubert/Kumho Tire reliability test is.
In 2010, Arizona changed the standard from Frye to Daubert. In 2011, the Arizona Supreme Court adopted Rule 702 – identical to the Federal Rule 702 – effective 1/1/12, which says:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: Negligence of the driver will not be imputed to or bar recovery of damages by an owner/passenger unless special relationship, such as master and servant or joint enterprise, exists. Reed v. Hinderland, 660 P.2d 464 (Ariz. 1983).
Vicarious Liability/Family Purpose Doctrine: No Vicarious Liability Statute.
Family Purpose Doctrine applies when: (1) there is a family with sufficient unity so that there is a head of the family; (2) the vehicle is furnished by the head of the family to a member of the family; and (3) the vehicle is used by the family member with the implied or express consent of the head of the family for a family purpose. Young v. Beck, 231 P.3d 940 (Ariz. App. 2010), aff’d, 251 P.3d 380 (Ariz. 2011).
Sponsor Liability for Minor’s Driving: A.R.S. § 28-3160: If a minor is guilty of negligence or willful misconduct while driving a motor vehicle, liability will be imputed to the person who signed the minor’s application for a drivers’ license.
The Family Purpose Doctrine is not abrogated by A.R.S. § 28-3160. See Country Mut. Ins. Co. v. Hartley, 204 Ariz. 596, 65 P.3d 977 (Ct. App. Div. 1 2003).
Product Liability Law
Statute of Limitations/Repose: 2 years for personal injury and wrongful death. A.R.S. § 12-542.
Liability Standards: Negligence, Strict Liability, Warranty, Other.
Fault Allocations: Pure Comparative. A.R.S. § 12-2505.
Non-Economic Caps/Limits On Actual Damages: No.
Punitive Y/N and Limits: Yes.
Heeding Presumption?: Yes, vanishing presumption. Golonka v. General Motors Corp., 65 P.3d 956, 968-69 (Ariz. App. 2003); Dole Food Co. v. N. Carolina Foam Industries, Inc., 935 P.2d 876, 883 (Ariz. App. 1996).
Innocent Seller Statute: Indemnity Statute.
Joint and Several Liability: No. A.R.S. § 12-2506.
Available Defenses: Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; State of Art; Preemption; Seatbelts; Alcohol/Drugs; Sophisticated User.
Restatement 2nd or 3rd?: Both.
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: N/A
Common Law Rule: The duty of one who leaves his key in an unattended vehicle does not extend to a plaintiff injured in an accident with the converter of the car. Shafer v. Monte Mansfield Motors, 372 P.2d 333 (1962) (this case involves unattended dealership lot).
In Arizona, the ASR is often the name given to and confused with the common law rule long followed in Arizona, known also as the “Anti-Assignability Rule”, which states that, absent a statute, an assignment of a cause of action for personal injuries against a third-party tortfeasor is void and unenforceable. Harleysville Mutual Ins. Co. v. Lea, 410 P.2d 495 (Ariz. App. 1966). Arizona also follows the more traditional ASR – an insurer cannot subrogate against its own insured to assert the claim of its named insured, even though it doesn’t often refer to it by that name. Transp. Indem. Co. v. Carolina Cas. Ins. Co., 652 P.2d 134 (Ariz. 1982). An entity that is an insured under the liability portion of an auto policy and, therefore, protected by the ASR for claims under the liability policy, can still be subrogated against under the collision portion of the policy. KnightBrook Ins. Co. v. Payless Car Rental Sys., Inc., 2015 WL 1754685 (D. Ariz. 2015). An individual hired to transport a vehicle is not an “insured” under the vehicle owner’s auto policy collision coverage, meaning that subrogation against the hired individual is permitted. Amica Mut. Ins. Co. v. Auto Driveaway Co., 831 P.2d 882 (Ariz. App. 1992). Where a policy expressly limits coverage to the named dealership, an individual who borrows the vehicle from a dealership is not an insured under the dealership’s collision policy, even if the policy extends coverage to the borrowed vehicle. Highlands Ins. Co. v. Fischer, 595 P.2d 186 (Ariz. App. 1979). In Auto Driveaway Co., a shipper’s insurer sued a common carrier, seeking reimbursement of money the insurer paid to the shipper for damage to her auto which occurred while it was being transported by a driver hired by the common carrier. The trial court entered summary judgment for the insurer and the carrier appealed. The Court of Appeals held that the driver of vehicle was not an “insured” under the auto collision policy, therefore, the shipper’s insurer could subrogate against the common carrier. In Fischer, the defendants contracted with a dealership to pay the market value of a substitute vehicle if it were destroyed, and subsequently received a substitute vehicle while their vehicle was repaired. The substitute vehicle was subsequently destroyed in an accident and the Court ruled that the dealership’s collision insurer could subrogate against the defendants because the dealership’s policy expressly limited coverage to the named insured on the policy and the defendants were not the named insureds despite the coverage being extended to substitute vehicles.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: A.R.S §§ 44-1292 to 1294.
Summary: The insurer must provide the claimant with a written notice attached to the repair estimate that “aftermarket” parts are being proposed for use in the repair of the vehicle. The insurer’s estimate must be in an amount that can be reasonably expected to satisfactorily repair the damage and restore the vehicle to its pre-collision condition. See Regulatory Bulletin 2003-9, 2003 WL 24891856 (AZ INS. BUL.), 2. Additionally, any non-OEM parts must be identified with a brand name or logo, and such name or logo should be left visible if practicable after the installation of the part.