Car accidents can be terrible and even lead to serious, unplanned financial difficulties. It is very easy for one to be overwhelmed by medical bills, car repairs, and lost wages. When a driver is liable for an accident, liability insurance helps with coverage of these expenses. Knowing how liability insurance works will help drivers protect themselves against financial loss.
Can someone sue you for a car accident if you have insurance? The quick answer is yes; liability insurance is meant to manage such situations. This kind of insurance pays damages up to the policy limit, thereby reducing the financial risk for the insured driver. If damages, however, exceed the coverage limit, the at-fault driver can still be personally responsible.
What is Liability Insurance?
Liability insurance covers damages when a driver causes an accident. It doesn’t cover vehicle repairs or injuries to the policyholder. Rather, it covers medical bills, lost wages, and pain and suffering for the wounded party. Most states mandate this kind of coverage to ensure drivers can pay for accident-related expenses.
How Liability Insurance Works in Car Accident Claims
The at-fault driver’s insurance company investigates the claim following an accident. The insurer determines fault based on police reports, witness statements, and other evidence. Should the policyholder be responsible, the insurance company compensates the injured person up to policy limits. If damages surpass these limits, the injured party can ask the driver for further compensation.
Types of Liability Insurance Coverage
There are two main components of liability insurance:
- Bodily Injury Liability (BIL): Covers the injured party’s pain and suffering as well as medical bills and lost wages.
- Property Damage Liability (PDL): Pays for vehicle repairs and other property damage resulting from the collision.
Every state sets minimum coverage requirements for these policies. For further financial protection, drivers can purchase higher limits.
Policy Limits and Their Impact on Claims
Every liability insurance policy comes with limits that define the highest payable amount the insurer will cover. Most of the time, these limits are written as three numbers, like 25/50/25. This means:
- $25,000 per person for bodily injury
- $50,000 per accident for physical injury if more than one person is hurt
- To fix damage to property, $25,000
If an accident causes more damage than these limits, the driver who caused the damage might have to pay for it all out of their own pocket. Some drivers choose higher limits to lower the risk to their own money.
What Happens When Damages Exceed Policy Limits?
If the costs of the accident are more than the at-fault driver’s insurance covers, the person who was hurt can file a claim. The court could tell the driver who caused the accident to pay the rest of the losses. A wage garnishment or asset seizure may be the result if the driver can’t pay. Drivers should consider buying umbrella insurance, which offers additional coverage beyond policy limitations, to avoid such circumstances.
State Requirements for Liability Insurance
Most states require drivers to have a certain amount of liability insurance. While each state has its own rules, not having insurance could lead to fines, license suspensions, or other punishments. Some states also require proof of financial responsibility to make sure drivers can pay for costs related to crashes.
Protecting Yourself with Adequate Coverage
Car accidents can happen at any time, and liability insurance offers financial protection. To reduce risk:
- Buy more coverage if possible.
- Consider umbrella insurance for additional protection.
- Understand state rules to stay out of trouble.
- Review policy details to confirm proper coverage.
Sufficient liability insurance allows drivers to properly manage accident claims. It guarantees affected parties get compensation and protects policyholders from financial difficulties.
When to Contact a Lawyer
One might have to see a lawyer if an accident causes significant injuries or high costs. A lawyer can ensure fair compensation and assist in negotiations with insurance companies. Legal help is especially crucial in cases when the insurance payout falls short of all damages.
