3.2 Arizona General Liability Insurance

Pure Comparative Negligence Meets Several Liability

Arizona pairs two doctrines that examiners love to contrast. Pure comparative negligence (A.R.S. 12-2505) governs how much a plaintiff recovers; several-only liability (A.R.S. 12-2506) governs how much each defendant pays.

A.R.S. 12-2506 abolished joint and several liability. In a personal-injury, property-damage, or wrongful-death action, 'the liability of each defendant is several only and is not joint.' Each defendant is liable only for its own percentage of fault — a plaintiff can no longer collect an entire judgment from one 'deep-pocket' co-defendant.

Worked example. A jury finds $100,000 in damages: Defendant A 60% at fault, Defendant B 40%. A pays $60,000; B pays $40,000. If B is insolvent, the plaintiff cannot force A to cover B's $40,000.

Exceptions where joint liability survives

• Defendants acting in concert (a common plan/design).
• A defendant acting as the agent or servant of another.
• A party held vicariously liable for another's fault.
• Certain hazardous-substance and federal-environmental claims.

Why this matters to a casualty producer

Because Arizona apportions fault to non-parties (people not sued, including the plaintiff's employer or a settled defendant), a CGL or auto liability insurer's exposure depends on the named insured's share — not the full judgment. A defendant whose share is small pays only that share, so liability limits are sized against likely allocated fault, not the gross verdict. The flip side: a plaintiff who cannot reach a key tortfeasor (insolvent, immune, or unidentified) absorbs that uncollectible share, reinforcing the value of first-party UM/UIM and umbrella coverage.

Commercial General Liability (CGL) and Rate Regulation

The Commercial General Liability (CGL) policy is the backbone of business casualty coverage. Producers should be able to read the declarations and explain the trigger and limits structure.

Arizona regulates commercial casualty rates on a file-and-use basis through the Department of Insurance and Financial Institutions (DIFI):

• Rates and forms are filed with DIFI and may be used immediately.
• Filings must be supported by actuarial data and may not be excessive, inadequate, or unfairly discriminatory.
• DIFI may disapprove a rate after the fact (post-implementation review).

Punitive Damages: Generally Uninsurable

Unlike some states (e.g., Texas), Arizona courts hold that insuring one's own punitive damages violates public policy, because shifting the punishment to an insurer defeats deterrence.

Products, Malpractice, and Time Limits

Arizona casualty exposures are shaped by statutes of limitation and repose:

• Products liability: strict liability for manufacturing defects; 2-year statute of limitations from injury; a 12-year statute of repose generally bars suits for products sold more than 12 years earlier.
• Medical malpractice: 2-year limit under the discovery rule; a preliminary expert opinion / certification of merit is required to proceed. Arizona's constitution bars caps on damages, so recovery is unlimited.
• General negligence/personal injury: 2-year statute of limitations (A.R.S. 12-542).

Professional Liability and Occurrence vs. Claims-Made

Many Arizona professionals carry or are encouraged to carry liability (errors & omissions) coverage:

Professional and CGL liability hinge on the coverage trigger, a frequent exam item:

• Occurrence policies cover injury that happens during the policy term, no matter when the claim is reported — better for long-tail exposures.
• Claims-made policies cover claims first made during the term (subject to a retroactive date); when the policy ends, an insured buys an extended reporting period (tail) to cover late-reported claims for prior acts. A gap between a claims-made expiration and a new occurrence policy can leave prior acts uninsured if no tail is purchased — a frequent client-service issue producers must flag at renewal.

Exam tip: Don't confuse the doctrines. Comparative negligence cuts the plaintiff's award; several liability splits the defendants' checks. Memorize: pure comparative + several-only + punitive damages uninsurable = the Arizona liability profile.