6.4 Named Driver Exclusion

• Jurisdiction: Arizona

The Arizona Legislature has authorized insurance carriers to exclude from automobile liability coverage specifically designated individuals by name. A.R.S. Sec. 28-4009(A)(3) provides that "[T]he owner's motor vehicle liability policy [may by] agreement in writing between a named insured and the insurer . . . exclude as insured a person or persons designated by name when operating a motor vehicle."

An insurance carrier's right to cancel an insurance policy that has been in effect for a period of 60 days is strictly regulated by statute. Nevertheless, an insurance carrier may cancel an insurance policy where an insured becomes permanently disabled, either physically or mentally; has his or her driver's license suspended or revoked; or has been convicted of certain enumerated criminal offenses.^[78] However, if the named insured agrees to exclude from liability coverage the person whose condition or conduct gives rise to the policy cancellation, the insurance carrier will not be permitted to cancel the policy as to the remaining insureds. A.R.S. Sec. 20-1631(C) provides:

The company shall not cancel or fail to renew the insurance when a person other than the named insured has violated subsection B, paragraph 3 if the named insured in writing agrees to exclude as insured such person by name when operating a motor vehicle and further agrees to exclude coverage to the named insured for any negligence which may be imputed by law to the named insured arising out of the maintenance, operation or use of a motor vehicle by such excluded person.

The insurance carrier's statutory right to have the offending insured...