6.9 Newly Acquired Vehicles

• Jurisdiction: Arizona

Standard automobile liability insurance policies provide coverage for newly acquired vehicles. Several conditions must be met before this coverage is applicable. The first condition for coverage is that the "newly acquired automobile must have been acquired after the commencement of the policy period.^[150] A vehicle that was owned before the purchase of the insurance policy but was not insured because it was inoperable does not qualify as a newly acquired vehicle.^[151]

The second condition requires the insured to notify the insurance company of the new vehicle's acquisition within 30 days. This requirement contemplates situations where physical delivery is the final act in the transfer of ownership.^[152] Where physical possession is not intended as a transfer of ownership, the ownership itself, rather than physical delivery, is the crucial concept.^[153] The intentions of the parties with regard to ownership will be determined "by their conduct, common usage, and the circumstances."^[154] Neither the date of physical possession nor the transfer of title is itself dispositive on the question of ownership.^[155]

The purpose and effect of the newly acquired vehicle clause is to provide automatic coverage during the 30-day notification period; coverage is precluded after that period unless the insured has given the necessary notification and otherwise complied with the terms of the clause.^[156] Because coverage is automatic throughout the 30-day notification period, it is immaterial that the insured (1) does not notify the insurance company within the period that he or she has acquired an additional automobile and (2) never pays an additional premium.^[157] Timely notification is a condition precedent to continued coverage after, not during, the 30-day grace period.^[158] Whether the notification was received during the grace period, or even during the policy period, is relevant not to the issue of the existence of coverage during the grace period but rather to whether the insurance company may withdraw that coverage because it has been prejudiced by tardy notification.^[159]

For example, in Daniels v. State Farm Mutual Automobile Insurance Co.,^[160] the court found coverage under the newly-acquired vehicle clause when the vehicle was involved in an accident but the insured failed to notify State Farm of the new vehicle's acquisition, not only during the 30-day grace period, but even within the policy term. Absent actual prejudice to the insurance company, the newly...