Arizona P&C Study Guide

Arizona P&C is the mirror image of Michigan’s: a traditional fault system rather than no-fault, and — most importantly for the exam — the most forgiving fault rule in the country. That one concept, pure comparative fault, anchors the whole auto section. Add a distinctive workers’ comp setup and you’ve got Arizona’s high-value points. Let’s work through it.

Licensing — the quick version

Arizona requires no pre-licensing education at all — the exam is the gate, not classroom hours. CE runs 48 hours per 4-year license period, including 6 hours of ethics. Surplus lines require a separate license (you must already hold property or casualty authority) and a documented diligent search of the admitted market first.

Auto — fault-based, 25/50/15, and SR-22

Arizona is a fault state — the at-fault driver’s liability pays — with no PIP statute at all. Minimum limits are 25/50/15 for policies issued or renewed on or after July 1, 2020. UM and UIM are optional: the insurer must offer them by written notice, but the insured may simply decline — the statute’s own heading reads “uninsured optional; underinsured optional.” Drivers who violate the financial-responsibility law may be required to carry an SR-22 (an insurer-filed certificate of financial responsibility) for about three years.

Comparative fault — the most forgiving rule there is

This is the Arizona concept the exam keeps coming back to. Arizona uses pure comparative fault: an injured party can recover no matter how much they’re at fault — even 99% — with their award simply reduced by their share of the blame. There’s no bar percentage at all.

Homeowners — wildfire country

Arizona’s defining property peril is wildfire, especially in the wildland-urban interface, where standard-market coverage has gotten harder to find. And here is the counterintuitive Arizona answer: there is no FAIR Plan — no residual property market of any kind. The only statutory mechanism is voluntary apportionment agreements among insurers (ARS § 20-395); hard-to-place homes go to the voluntary or surplus lines market. Ordinance-or-law coverage matters here too — older homes often must be rebuilt to current code after a loss. And as always, flood is excluded from homeowners policies (Arizona’s monsoon flash floods make NFIP or private flood coverage a real need).

Workers’ comp — the broadest threshold

Arizona requires workers’ comp for every employer with one or more employees — no small-employer exception at all, one of the broadest thresholds in the country. The system is run by the Industrial Commission of Arizona (ICA), benefits replace 66⅔% of the average MONTHLY wage (monthly, not weekly — plus a $100/month dependent allowance), there’s a 1-year filing deadline, and employers comply by insuring with a licensed carrier or qualifying as self-insurers.

Cancellation and nonrenewal

Arizona’s notice periods run asymmetrically by line — homeowners short, auto long. Nonrenewal: homeowners 30 days, auto 45 days, and the reason must be stated proactively for both lines. In a new policy’s first 60 days (both lines), the insurer may cancel more freely — on 5 days’ notice for homeowners and 10 days’ for auto; after 60 days, cancellation narrows to the enumerated statutory grounds. Auto nonpayment is its own animal: a 7-day grace period, after which the cancellation is effective the date the notice is sent. Learn the asymmetry as a pair of couplets — HO 5/30, auto 10/45 — and this section takes care of itself.