SQL Server on Azure VM Backup minimizing data duplication

A while back, a Microsoft support engineer recommended using SQL on VM backups. The suggestion was to create an SQL DB in an Azure VM job and an Azure VM job, excluding the disks that host the SQL files, to avoid data duplication.

If the VM is deleted and I need to restore it from backups, SQL disks will not be included in the restore. When I run the restore of the DBs, I’m guessing the job expects the disks to exist and will fail to restore them. I know we can run both backups and include the disks on the VM, but we are trying to save on storage costs and avoid data duplication. Excluding file type from the VM backup job would be ideal, but I haven’t found anything indicating if this is possible. I want to do an SQL Database in Azure VM type of backup where I can have log backups and ensure I have a good RPO and back up the VM, minimizing data duplication. How do we handle this scenario?