To the average person, auto insurance forms and policies might as well be written in a foreign language. The complex and technical legal terms can leave you baffled and confused. In addition to the policy language, it can also be difficult to determine the amount and extent of coverage you need.
Let's explain the basics.
In Arizona, all vehicles are required to have insurance before they can be registered. Arizona has also set minimum coverage standards. Every vehicle registered in Arizona must have 15/30/10 insurance. This means that each vehicle must have bodily injury Liability Coverage of at least $15,000 per person and $30,000 per accident, as well as $10,000 in Property Damage Coverage per accident.
WHAT IS LIABILITY AND PROPERTY DAMAGE COVERAGE?
Liability Coverage only covers the personal injuries of another for which you become legally responsible. Liability Coverage does not cover your own personal injuries. The amount that your auto insurance company will pay the injured party will depend on what amount of coverage ($15,000, $30,000, etc.) you selected for your policy when you signed up. If you want your personal injuries covered, you should purchase Medical Payments Coverage. Medical Payments Coverage will pay for you hospital bills even if you were found to be at fault.
Property Damage Coverage pays for damage you caused that may have occurred to the vehicle or property of others. Like Liability Coverage, Property Damage Coverage pays for damage you caused up to the amount stated in your policy ($15,000, $30,000, etc.). If you want the damages to your vehicle also covered, you must include and pay for Collision Coverage in your policy.
HOW MUCH OF EACH COVERAGE SHOULD I PURCHASE?
To fairly answer that question, let's explain the potential consequence of having minimum coverage. If the injured party's damages exceed your Liability Coverage, then the injured party is free to sue you personally for the difference. For example, if you cause $50,000 worth of injuries to another driver, but you only have a $15,000 liability policy, the injured party can pursue you for the $35,000 difference. This result alone compels many to purchase as much insurance as they can reasonably afford.
WHAT IF THE OTHER DRIVER HAS LITTLE OR NO INSURANCE TO COVER MY INJURIES OR DAMAGES?
Although insurance is required by law in Arizona, unfortunately many drivers do not have it. When a vehicle with little or no insurance causes an accident, often it is the injured party who is left with the bill. This can cause substantial out-of-pocket expenses unless the injured party has Uninsured Coverage or Underinsured Coverage.
WHAT IS UNDERINSURED COVERAGE AND WHY SHOULD I PURCHASE IT?
Underinsured Coverage protects you and the passengers in your vehicle when you are hit by someone who doesn't have enough insurance coverage to cover your injuries or property damage. For example, if another driver hits you, and doesn't have enough coverage on his policy to cover your injuries, your Underinsured Coverage will make up the difference. To purchase Underinsured Coverage, it usually only requires a few dollars more on your monthly premium. Considering the number of drivers in Arizona who only purchase the minimum coverage limits, and the high costs of medical bills, it is probably wise to purchase Underinsured Coverage.
WHAT IS UNINSURED COVERAGE AND WHY SHOULD I PURCHASE IT?
Studies have shown that more than 1 in 5 drivers in Arizona do not have auto insurance. What happens if you are injured by a vehicle that does not carry insurance? In this case, your only source of recovery may hinge on whether you purchased Uninsured Coverage as part of your own policy. Uninsured Coverage provides coverage for bodily injuries, medical expenses, and lost wages. Uninsured Coverage also will cost a few dollars every month to your policy premium. However, considering the significant number of uninsured drivers on the road, you probably cannot afford to not purchase it.