diff --git a/awx/main/models/inventory.py b/awx/main/models/inventory.py
index 5c1f4ef8eb..a32b2da052 100644
--- a/awx/main/models/inventory.py
+++ b/awx/main/models/inventory.py
@@ -1991,6 +1991,8 @@ class azure_rm(PluginFileInjector):
 
         source_vars = inventory_update.source_vars_dict
 
+        ret['fail_on_template_errors'] = False
+
         group_by_hostvar = {
             'location': {'prefix': '', 'separator': '', 'key': 'location'},
             'tag': {'prefix': '', 'separator': '', 'key': 'tags.keys() | list if tags else []'},
diff --git a/awx/main/tests/data/inventory/plugins/azure_rm/files/azure_rm.yml b/awx/main/tests/data/inventory/plugins/azure_rm/files/azure_rm.yml
index af633f976c..aaf811e082 100644
--- a/awx/main/tests/data/inventory/plugins/azure_rm/files/azure_rm.yml
+++ b/awx/main/tests/data/inventory/plugins/azure_rm/files/azure_rm.yml
@@ -4,6 +4,7 @@ default_host_filters: []
 exclude_host_filters:
 - resource_group not in ['foo_resources', 'bar_resources']
 - location not in ['southcentralus', 'westus']
+fail_on_template_errors: false
 hostvar_expressions:
   ansible_host: private_ipv4_addresses[0]
   computer_name: name