Typically you need to insure the vehicle in the state in which it is registered and has its license plates in. With you living in California and your sister and the car being in Arizona it would difficult to get AZ insurance on it if it still registered in California. Most insurance companies will not want to insure vehicles from more than one household, meaning the owner living in one place and the car residing at a different place.

There is a difference in required insurance between the two states as well. California's mandatory liability insurance is 15/30/5 while Arizona requires 15/30/10. Arizona also requires motor vehicles that will continuously be on their roadways to be covered by an insurance company authorized to do business in Arizona.

It appears for your situation that to get the car properly insured in Arizona it would need to be registered in AZ. For information on how to do so you can contact the AZ DOT. You can start now getting Arizona car insurance quotes.