Yes, if you are out of state in Arizona and are at fault in an accident with your Michigan registered and insured vehicle than your Residual Bodily Injury and Property Damage Liability (BI/PD) would be used to pay the damages you caused to another vehicle in an accident.

MI Residual Bodily Injury and Property Damage Liability pays your defense costs and any damages you are found liable for as the result of an auto accident, up to the limits of the policy. The minimum limits of coverage that everyone must purchase are $20,000 for a person who is hurt or killed in an accident, $40,000 for each accident if several people are hurt or killed, and up to $10,000 for property damage in another state.

So your basic Michigan no-fault policy pays up to certain amounts for which you are found to be legally responsible in other states. This basic Liability coverages thus pays up $10,000 for property damage you caused to the other vehicle in Arizona.

If you chose to purchase increased limits of Residual Liability insurance coverage than your Liability coverages may be more than the basic 20/40/10 liability coverage that you are required to purchase in Michigan.

Now if you were in an accident in Arizona and the Arizona driver was at fault since the incident took place in AZ which is a tort state than you should be able to make a claim for your car's damages against the at-fault driver's Property Damage Liability policy.

You can check with the Michigan insurance regulator for more information on how your MI auto insurance policy extends to when you drive out of state. And to get an affordable MI car insurance quote click here.