Vehicle owners have options when it comes to how much insurance coverage they purchase. Additionally, there often isn't a means by which to foresee exactly how much costs associated with an accident will be. This means that vehicle owners sometimes don't have enough insurance coverage. Because of the financial and legal ramifications involved, all vehicle owners should understand what happens when an insurance company doesn't pay all accident costs.
In the event you get into an accident and your insurance doesn't cover all the related expenses, you may be responsible for paying the difference, depending on whether you were at fault and whether the other parties have any insurance. This includes your deductible, if you have one. For example, if your accident costs were $20,000, your coverage provided only $15,000 and your deductible was $500, you possibly could owe $5,500. Any service providers or other agencies involved in the accident may send you bills. If you are still paying on a car loan and the car is totaled in the accident, the loan provider may call in the remaining balance on the loan.
If you were at fault for your accident, the other parties involved may contact your insurance company to see if your company will pay. This is ideal for them because it means they don't have to pay a deductible as they would if they filed claims through their own companies. If your company can't pay because you lack sufficient coverage, the insurance companies involved with the other parties may allow those parties to file insurance claims that covers the costs, depending on the terms of their policies. If the other parties involved cannot get costs covered through the insurance companies, then those parties may resort to suing you. If they win the lawsuit, the judge assigned to the case may order you to pay through your own assets, or the court may allow the other parties to garnish or seize your wages and bank accounts.
Reassessment and Appeal
Occasionally, insurance companies make a bad call when it comes to what they pay after an accident. If you disagree with what the insurance company says you should get, hire an independent appraiser. Have him evaluate damages and costs to see if the insurance company's estimates are accurate. Then get an attorney to review your policy and see if the insurance company's rationale for not covering all expenses is valid. If your appraiser and attorney tell you the insurance company probably has erred, file an appeal according to your insurance company's appeals process and, if necessary, sue the insurance company for nonpayment.
Because insurance companies don't always cover all of the costs associated with an accident, it often is a good idea to purchase additional gap insurance. Gap insurance covers the difference between what the primary insurance company pays and what the accident costs are.