What exactly is the role of car insurance in a vehicle accident case? How does the availability or unavailability of insurance affect the value of a personal injury claim, and how does it factor into the decision of who to make the claim against? Let's examine those questions in the context of different types of car insurance coverage.
Liability insurance is standard car insurance. Liability insurance insures the driver and authorized users of a vehicle against claims arising from car accidents caused by negligence -- and (in most states) crashes caused by recklessness -- up to the coverage limits of the policy.
For example, if you make a claim against someone who carries $100,000 of liability insurance, and your claim is theoretically worth $200,000, that driver’s insurer only has to pay you $100,000, since that is the coverage limit of the policy.
Most insurance adjusters won’t respond to settlement demands that exceed the available insurance. Regardless of how much you or your lawyer think your claim is worth, if you want the adjuster to make an offer, you can’t make a demand that is more than the policy limits. So, if the at-fault driver's policy limits are $100,000, and your demand is $150,000, most adjusters won’t even respond. They simply have no duty to address demands that exceed the available insurance.
Almost every car insurance policy has at least a minimal amount of uninsured driver coverage. The standard policy usually comes with a small amount of this coverage, and you can certainly purchase additional coverage. Uninsured driver coverage comes into play when you are involved in an accident with another driver who has no car insurance.
So, how does it work? If an uninsured driver hits you, you would make a claim against your own insurance company for uninsured driver benefits. You almost definitely would not try to pursue the uninsured driver personally. People who have no car insurance rarely have any money.
Most insurance policies have underinsured driver coverage as well. As with uninsured motorist protection, your policy might come with a minimum about of underinsured driver coverage, and you can purchase more.
Underinsured driver coverage is for accidents involving a driver who does not have enough insurance to pay your damages. As with uninsured driver benefits, in an underinsured driver claim, you would make a claim against your own insurance company up to the limit of your underinsured driver coverage.
However, there is one catch. You can only make an underinsured driver claim against your insurer if your underinsured driver coverage exceeds the negligent driver’s policy limits. Let’s use an example to illustrate this.
Say your case is worth $200,000, but the driver that hit you only has $100,000 of coverage. You can make an underinsured driver claim against your own insurer only as long as you have more than $100,000 in underinsured driver coverage. If you had $250,000 in underinsured driver coverage, you would settle with the negligent driver for $100,000, and then you would try to settle with your insurer for another $100,000.
But if you only had $50,000 of underinsured coverage, you couldn’t settle with the negligent driver for $100,000 and then take $50,000 more from your policy. You can only take from your underinsured policy that amount that exceeds the negligent driver’s coverage.
One little quirk about uninsured and underinsured driver coverages is that they can’t exceed the amount of your primary coverage. For example, if you only have $50,000 in standard liability coverage, you can only have up to $50,000 in uninsured or underinsured coverage.
Learn more about When to Make an Underinsured or Uninsured Motorist Claim.
If the police respond to the accident, they will find out whether any of the drivers is uninsured. In any state, the police are going to demand the driver’s license, car registration, and insurance information from each driver. In some states, the insurer is listed directly on a driver's car registration form.
But if the police do not respond to the accident, and the accident occurs in a state that does not have insurance information printed on a drivers' car registration -- or the driver refuses to produce that information -- then you are more or less at the other driver’s mercy.
All you can do is ask for the other driver to produce an insurance card or tell you who their insurer is. If they refuse, then you can either call the police and hope that the driver waits around for them to show up, or just take whatever information you can get and leave.
At the very least, if you see the other driver’s license and note down the car’s license plate, you can report the accident to the police later and the police will likely be able to get to the bottom of the insurance situation. Also, in some states, insurance companies have access to the state database of drivers and insurers. In those states, you can simply report the accident to your insurer and hopefully an agent can tell you who the other driver’s insurer carrier is.
Learn more about Resolving a Car Accident Claim.