How Much Does Insurance Pay for an At-Fault Car Accident?
If you're ever found to be at fault in an auto accident, you'll no doubt be thankful for your auto insurance. Without it, you could easily lose virtually everything you own to pay for the injuries and damages sustained by others. How much your insurance pays to others depends on the severity of the accident and the amount of coverage you decide to carry.
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Liability Insurance
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If a claim investigation determines that an accident resulted due to your negligence, your policy pays through its liability coverage. Some form of liability insurance is mandatory for vehicle owners in virtually every state, although each state sets its own minimum liability requirements. Liability insurance consists of bodily injury, which pays for injuries sustained by the other driver and her passengers, and property damage, which pays to repair or replace the insured's vehicle, as well as other property that you may strike with your vehicle, such as a building.
Limits
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Your liability insurance pays up to the limits of your policy. For instance, if you live in Iowa and carry the minimum liability limits of 20/40/15, your policy pays for injuries up to $20,000 per person and a total of $40,000 per any one occurrence. It also pays up to $15,000 for property damage. The amount you're required to pay is determined by your liability adjuster and the claims adjusters for the other parties' insurers.
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Tort Law
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If your state follows a tort system, the injured party may be able to sue you for additional damages. If the injured party had selected the limited tort option on his own policy, the amount of damages he can recover are somewhat restricted. If he carries full tort, he's entitled to sue you for additional damages for pain and suffering if he chooses. Regardless of the amount of any judgment against you, your policy pays no more than its designated limits.
Excess Damages
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If the damages exceed the amount of your liability limits, the injured party may be able to recover the additional amount under his uninsured/underinsured coverage if he carries them on his policy. Otherwise, you're responsible to pay the amount out of your own pocket, which may result in a garnishment of your wages or other means of recovery. This may cause you severe financial hardship for years to come. To prevent this type of scenario, it's advisable to make your liability limits as high as you can reasonably afford.
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References
- Photo Credit car crash image by dawn from Fotolia.com
