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Two Policies Covering the Same Loss In Car Accident In Arizona

A.R.S Section 28-1170.01 governs the allocation of coverage when two or more insurers issue motor vehicle liability policies that cover the same loss. See John Deere Ins. Co. v. West American Ins. Group, 175 Ariz. 215, 854 P.2d 1201 (App. 1993).

The general rule is prescribed in § 28-1170.01(B), which provides as follows:

Except as provided in subsection a of this section, if two or more policies affording valid and collectible liability insurance apply to the same motor vehicle in an occurrence out of which a liability loss shall arise, it shall be conclusively presumed that the insurance afforded by that policy in which such motor vehicle is described or rated as an owned automobile shall be primary and the insurance afforded by any other policy or policies shall be excess.

Thus, under subsection B, when an individual is driving another person's vehicle, it is conclusively presumed that the policy insuring the vehicle, rather than the policy insuring the driver, is primary. the trial court determined, however, that, because Orduno was driving a vehicle owed by an entity engaged in the business of selling automobiles, subsection A, not subsection B, controls here.

Subsection a provides as follows:

If two or more policies affording valid and collectible automobile liability insurance apply to the same motor vehicle in an occurrence out of which liability loss shall arise, and one of such policies affords coverage to a named insured engaged in the business of selling, repairing, servicing, delivering, testing, road testing, parking or storing motor vehicles, both of the following shall be conclusively presumed:

If, at the time of loss, the motor vehicle is being operated by any person engaged in any of such businesses, or by his employee or agent, the insurance afforded by the policy issued to the person engaged in such business shall be primary, and the insurance afforded by any other policy shall be excess.

If, at the time of loss, the motor vehicle is being operated by any person other than as described in paragraph 1, the insurance afforded by the policy issued to any person engaged in any of such businesses shall be excess over all other insurance available to such operator as a named insured or otherwise.

Accordingly, subsection A, the so-called garagekeeper's provision, presumes that a "named insured's" coverage shall be primary, in contrast to the presumption in subsection B that the policy insuring the vehicle shall be primary.