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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
watercraft; insurance requirements; penalties
Purpose
Requires a watercraft owner who provides a watercraft for rent or charter in Arizona at least four times in a calendar year, a boat livery owner who provides a watercraft for hire on a waterway in Arizona and a peer-to-peer watercraft sharing program (sharing program) to maintain a liability insurance policy and prescribes coverage requirements for the policy. Classifies a watercraft owner's or boat livery owner's failure to adhere to the insurance requirements as a class 3 misdemeanor or a class 1 misdemeanor, if the watercraft is involved in an accident in Arizona.
Background
Statute regulates the operation of watercraft on all waterways in Arizona, excluding vessels owned by federal government agencies in performance of their official duties (A.R.S. Title 5, Chapter 3).
A watercraft
is any boat designed to be propelled by machinery, oars, paddles or wind action
on a sail for navigation on the water, or as may be defined by rule of the
Arizona Game and Fish Commission (Commission). A waterway is any body of
water, public or private, on which a watercraft can be navigated. A livery is
a business authorized to rent or lease watercraft with or without an operator
for recreational, non-commercial use as prescribed by law (A.A.C.
R12-4-501; A.R.S.
§ 5-301).
Statute requires a boat livery owner to keep a record of the name and address of the person or persons hiring any watercraft, the person's identification number, the departure date and time and the expected and actual time of return and to preserve the record for at least three months (A.R.S. § 5-371).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Boat Liability Insurance Minimum Coverage
1. Requires a watercraft owner who provides a watercraft for rent or charter in Arizona to maintain a commercial boat liability policy or a personal lines boat policy with a specified commercial or charter boat liability coverage endorsement, unless the owner provides the watercraft for rent or charter fewer than four times in a calendar year.
2. Requires a boat livery owner to maintain a commercial boat liability policy for persons who hire a watercraft for use on a waterway in Arizona and requires the liability coverage to be in effect at any time the watercraft is operated on a waterway in Arizona.
3. Requires a sharing program to maintain a primary commercial boat liability insurance policy that provides coverage for bodily injury or property damage that occurs during the watercraft transaction.
4. Requires a watercraft owner's, boat livery owner's and sharing program's boat liability policy to provide primary boat liability insurance coverage as follows:
a) $25,000 because of bodily injury to or death of one person in any one accident;
b) subject to the limit for one person, $50,000 because of bodily injury to or death of two or more persons in any one person in any one accident; and
c) $20,000 because of injury to or destruction of property of others in any one accident.
5. Requires a watercraft owner who provides a watercraft for rent or charter in Arizona to maintain, at all times, the specified coverage for injuries to persons and for loss or damage to property by reason of the rental or operation of the watercraft provided by the owner for rent or charter.
6. Requires the owner of a boat livery to maintain, at all times, the specified coverage amounts.
7. Classifies a watercraft owner's or boat livery owner's failure to adhere to the outlined insurance coverage requirements as a class 3 misdemeanor or class 1 misdemeanor, if the watercraft is involved in an accident in Arizona.
Sharing Program Insurance Requirements
8. Defines sharing program as a business that connects watercraft owners with watercraft operators to enable the sharing of watercraft for financial consideration and does not include a boat livery or commercial motorized watercraft.
9. Requires a sharing program to ensure that the commercial liability insurance policy recognizes that the watercraft insured under the policy is made available and used through the sharing program and does not exclude the use of a shared watercraft by a shared watercraft operator.
10. Requires a sharing program to provide proof of insurance to the shared watercraft operator before the watercraft sharing start time.
11. Requires, if an accident occurs during the watercraft sharing period, the shared watercraft operator and the sharing program to provide proof of insurance at the time of the accident to the parties involved in the accident.
12. Requires a sharing program to collect, verify, and retain for six years after the termination of a shared watercraft transaction, records relating to the use of a shared watercraft, including times used, fees paid by the shared watercraft operator and monies received by the shared watercraft owner.
13. Requires, in an insurance claim investigation, the sharing program and any insurer that provides the required insurance coverage to cooperate with all other parties involved in the claim.
14. Specifies that in an insurance claim investigation:
a) the sharing program must provide to any interested party the required records; and
b) the insurer that provides the required insurance coverage must provide a clear description of the coverage afforded and any coverage limitations and exclusions.
15. Specifies that the sharing program insurance requirements do not prohibit a sharing program from recovering insurance costs from a shared watercraft owner or shared watercraft operator.
16. Specifies that the sharing program insurance requirements do not limit:
a) the liability of a sharing program for any act or omission that results in injury to any person as a result of the use of a shared watercraft through a shared watercraft transaction; or
b) the ability of the sharing program, by contract, to seek indemnification from the shared watercraft owner or the watercraft operator for economic loss that is sustained by the sharing program and that results from a breach of the terms and conditions of the shared watercraft transaction.
17. Allows required sharing program insurance policies to be obtained from an insurer authorized to transact insurance in Arizona, a domestic surplus lines insurer authorized to issue insurance coverage in Arizona or a surplus lines insurer.
Commission Watercraft Administration
18. Allows the Commission to require a watercraft or boat livery owner who is subject to the outlined insurance coverage requirements to certify the existence of insurance in the form and at the time the Commission deems necessary.
19. Allows the Commission to forward the watercraft owner's or boat livery owner's certification of insurance to the named insurer to determine if the certification is correct.
20. Specifies that civil liability does not accrue to the insurer or any of its employees for reports made to the Commission if the reports are made in good faith based on the most recent information available to the insurer.
Miscellaneous
21. Specifies that an insurer authorized to transact insurance in Arizona:
a) is not required to offer, issue, renew or provide a commercial boat liability policy; and
b) is not prohibited from voluntarily offering or providing a commercial boat liability policy pursuant to the insurer's underwriting standards and risk selection.
22. Defines boat livery as a business that rents, leases or charters a motorized watercraft, a personal watercraft or any other watercraft to the general public for noncommercial, recreational use.
23. Defines terms.
24. Makes technical and conforming changes.
25. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Allows a watercraft owner to maintain a personal line boat policy with specified commercial or charter boat liability coverage in place of commercial boat liability insurance.
2. Establishes requirements for sharing programs and requires a sharing program to obtain and maintain a primary commercial boat liability insurance policy.
3. Prescribes minimum coverage requirements for a sharing program's required insurance policy and requires that a sharing program's policy does not exclude the use of a shared watercraft by a shared watercraft operator.
4. Requires a sharing program to collect, verify, and retain for six years after the termination of a shared watercraft transaction, records relating to the use of a shared watercraft.
5. Outlines requirements for a sharing program during a watercraft sharing period and during an insurance claim investigation.
6. Specifies that the sharing program insurance requirements do not prohibit a sharing program from recovering insurance costs from a shared watercraft owner or shared watercraft operator.
7. Specifies that the sharing program insurance requirements do not limit any of the following:
a) the liability of a sharing program for any act or omission that results in injury to any person as a result of the use of a shared watercraft through a shared watercraft transaction; or
b) the ability of the sharing program, by contract, to seek indemnification from the shared watercraft owner or the watercraft operator for economic loss that is sustained by the sharing program and that results from a breach of the terms and conditions of the shared watercraft transaction.
8. Specifies that an insurer authorized to transact insurance in Arizona is not required to offer, issue, renew or provide a commercial boat liability policy.
9. Defines terms.
10. Makes technical and conforming changes.
Amendments Adopted by Committee of the Whole
1. Exempts a watercraft owner who provides a watercraft for rent or charter in Arizona fewer than four times in a calendar year from the requirement to maintain a commercial boat liability policy or a personal lines boat policy with a specified commercial or charter boat liability coverage endorsement.
2. Makes conforming changes.
Amendments Adopted by Additional Committee of the Whole
1. Clarifies the types of insurers from which a peer-to-peer watercraft sharing program may obtain a primary commercial boat liability insurance policy.
2. Makes technical changes.
House Action Senate Action
TI 1/28/26 DP 7-0-0-0 FIN 3/23/26 DPA 6-1-0
3rd Read 2/24/26 42-13-5
Prepared by Senate Research
June 10, 2026
MG/hk