If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to third parties in the accident, including legal bills. Bodily injury expenses include medical bills and lost wages. Property damage expenses pay for the repair or replacement of the property you damaged

Liability coverage is usually referred to as a series of three numbers. For example, you might have liability limits of 50/100/50. That stands for $50,000 in bodily injury coverage per person, $100,000 in bodily injury coverage per accident, and $50,000 in property damage coverage per accident.

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Currently, Arizona state law requires that your purchase the following coverages:

• bodily injury liability of $15,000 per person/$30,000 per accident
• property damage liability coverage of $10,000 per accident

Most people find the state-mandated auto insurance coverages too low. If you cause an accident and have only the minimum required coverages, you may find yourself liable for some serious damages.

A more typical auto insurance policy might include limits of $100,000/$300,000/$50,000. Also included in the typical policy would likely be a $5,000 coverage or more for medical payments and uninsured & underinsured motorists coverage at the same limits of the bodily injury liability. Drivers of newer or nicer cars should probably purchase comprehensive and collision coverage as well.

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Comprehensive coverage will pay for damages to your vehicle that weren't caused by an auto accident. For example: damages from theft, fire, vandalism or natural disasters all qualify. Comprehensive coverage also comes with a deductible and your insurer will only pay as much as the vehicle was worth when it was damaged.

Collision coverage will pay to repair your vehicle if you cause an accident. Collision coverage is normally the most expensive coverage of auto insurance. By choosing a higher deductible, say $250 or $500, you can keep your premium costs down. However, keep in mind that you must pay the amount of your deductible before the insurance company kicks in any money after an accident.

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Medical payments will pay for your and your passengers' medical expenses after an accident. These expenses can arise from accidents while you are driving your vehicle, someone else's vehicle (with their permission) and injuries you or your family members incur when you are pedestrians. The coverage will pay regardless of who is at fault.

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Uninsured motorists (UM) coverage pays for your injuries if your are struck by a hit-and-run driver or someone who doesn't have auto insurance.

Underinsured motorists (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover.

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Arizona has a noncancellation law that limits the reasons insurers can cancel policies after the first 60 days. Auto insurance companies can nonrenew a customer if the driver has had three at-fault accidents within the past three years with a total property damage of $1,800 or more.

If you let your policy lapse, your insurer has to notify the Arizona Department of Motor Vehicles. The DMV will send you a letter asking for proof of financial responsibility and will suspend your license if they don't receive it.

If you get caught driving without insurance you may be required to file an SR-22 form. You will have to pay to have your license reinstated and you will have to pay for the SR-22 for three years. Of course, if you actually cause an accident while driving uninsured, you will also have to pay for all the damages out of your own pocket.

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