diff --git a/src/_nebari/stages/infrastructure/__init__.py b/src/_nebari/stages/infrastructure/__init__.py
index 0c5a60a06c..553e520e3a 100644
--- a/src/_nebari/stages/infrastructure/__init__.py
+++ b/src/_nebari/stages/infrastructure/__init__.py
@@ -106,7 +106,7 @@ class AzureInputVars(schema.Base):
     tags: Dict[str, str] = {}
     max_pods: Optional[int] = None
     network_profile: Optional[Dict[str, str]] = None
-    azure_policy_enabled: bool = None
+    azure_policy_enabled: Optional[bool] = None
     workload_identity_enabled: bool = False
 
 
@@ -374,6 +374,7 @@ class AzureProvider(schema.Base):
     network_profile: Optional[Dict[str, str]] = None
     max_pods: Optional[int] = None
     workload_identity_enabled: bool = False
+    azure_policy_enabled: Optional[bool] = None
 
     @model_validator(mode="before")
     @classmethod
diff --git a/src/_nebari/stages/infrastructure/template/azure/variables.tf b/src/_nebari/stages/infrastructure/template/azure/variables.tf
index ac36f42fd6..44ef90463f 100644
--- a/src/_nebari/stages/infrastructure/template/azure/variables.tf
+++ b/src/_nebari/stages/infrastructure/template/azure/variables.tf
@@ -92,4 +92,5 @@ variable "authorized_ip_ranges" {
 variable "azure_policy_enabled" {
   description = "Enable Azure Policy"
   type        = bool
+  default     = false
 }