The average cost of full coverage car insurance in the United States is around $2,543 annually, or roughly $212 per month. For most people, this is a reasonable expense to ensure protection in case of an accident. However, what happens if the damage from a car accident exceeds your insurance policy limits? In such situations, you may be left responsible for covering the difference out-of-pocket, which can create significant financial strain. In this blog, we’ll explain what to do when your car accident claim exceeds your insurance limits and how to safeguard yourself from these potential financial challenges.
What Are the Odds of an Accident Claim Exceeding Insurance Limits?
The chances that a claim will exceed your insurance limits depends mainly on two things. The severity of the accident and the amount of coverage you have. The higher your policy limits are, the less likely you are to exceed them. However, even with substantial coverage, a severe accident could result in damages that surpass your policy’s limits. In such cases, you could be required to pay the difference from your personal funds. This is why it’s important to understand your coverage and ensure it’s adequate for your needs. If you’re concerned about the possibility of exceeding your insurance limits, one option to consider is purchasing Umbrella Insurance, which provides extra liability coverage beyond your regular auto and home insurance.
What Happens If You’re at Fault for an Accident and Your Claim Exceeds the Other Driver’s Insurance Limit?
If you’re at fault in an accident and the damages exceed the other driver’s insurance coverage, you could be in serious financial trouble. The other driver may pursue legal action to recover remaining costs after insurance or additional damages. These costs can include medical bills, property damage, and lost wages. If the other driver wins the lawsuit, you could be responsible for these damages out of your own pocket. This makes it crucial to ensure you have adequate insurance coverage, as well as consider options like Umbrella Insurance.
What Happens If You’re NOT at Fault for an Accident and Your Claim Exceeds the Other Driver’s Insurance Limit?
If you’re not at fault and your claim exceeds the other driver’s policy, the situation can become even more complicated. In this case, you can file a claim with your own insurance company if you have uninsured or underinsured motorist coverage. This type of coverage protects you when the at-fault driver doesn’t have sufficient insurance to cover the damages. However, if you don’t have this coverage, you may be unable to receive anything from insurance. In that case, you might have to pursue legal action against the other driver. Even then, however, there’s no guarantee that you will win the case. Assuming you win, that the other driver would need to have the funds to pay the damages.
How to Avoid Having Your Car Accident Claim Exceed Your Insurance Limit
To reduce the chances of your car accident claim exceeding your insurance limit, there are several steps you can take. First and foremost, always make sure you have enough coverage. The minimum liability insurance required by your state might not be sufficient to cover all damages in the event of a serious accident, so it’s a good idea to carry additional coverage whenever possible.
Another important step is ensuring you have collision coverage. This will help pay for repairs to your vehicle, up to the policy’s limits. However, if you’re at fault in the accident, and the damages exceed your insurance coverage, you will be responsible for covering the remainder. This is why it’s important to set aside money to pay for potential out-of-pocket costs. Furthermore, you should always consult with an experienced attorney after an accident. A personal injury lawyer can help you understand your rights and ensure that you are fairly compensated for any damages and injuries.
Protecting Your Assets After a Car Accident
If your car accident claim exceeds your insurance limits, you may need to protect your assets. In such cases, you might be liable for paying the remaining damages out of your own pocket. To prevent losing your assets, there are a few strategies you can employ:
- Review Your Insurance Policy: Make sure you fully understand what your insurance policy covers, as well as any exclusions or limitations. This knowledge will help you anticipate the coverage you can expect if you need to file a claim.
- Track Expenses: Keep detailed records of all accident-related expenses, including medical bills, car repairs, and lost wages. This documentation can be valuable in case you need to pursue additional compensation.
- Consider Setting Up a Trust: If you’re concerned about protecting your assets, you may want to explore the possibility of setting up a trust. A trust can help shield your assets from creditors if you’re sued following an accident.
- Consult an Attorney: Speaking with an experienced personal injury attorney can provide you with valuable insights into your situation and help you determine the best course of action to protect your financial future.
Conclusion
If you are involved in a car accident and the damages exceed the insurance limits of either party, it’s essential to understand what steps to take to protect yourself. If you’re at fault, you could be sued for the remaining damages, and if you’re not at fault, your chances of recovery depend on your insurance coverage and the at-fault driver’s ability to pay.
At TraumaLaw, we specialize in helping individuals navigate the complexities of car accidents, insurance claims, and personal injury lawsuits. If you’re worried about exceeding your car insurance limits or are dealing with a serious accident claim, don’t hesitate to contact us. Call 866-608-3601 for a free case review, and let us help you secure the compensation you deserve.
