What If I'm At Fault For a Car Accident?

When you're at fault for a car accident, the consequences depend on where you live (in a "fault" or "no-fault" state) and the details of your car insurance policy.

Oftentimes, it's not obvious who was at fault for a car accident. When vehicles collide while merging, for example, or when a crash happens in a parking lot, it can be difficult to make an accurate liability determination. But what if, deep down you're certain -- or at least pretty sure -- that you caused a car accident? If you find yourself in this situation, here are a few things to consider.

The Accident

You were texting while driving, and this distraction kept you from noticing the sudden backup of traffic in front of you. You slammed on the brakes, but it was too late, and you crashed into the back end of the car in front of you, causing extensive damage to both vehicles and injuring the other car's driver. Fault for this accident clearly lies with you. (Learn more about rear-end car accidents and car accidents caused by phone use.)

So now what?

Once the dust settles and information has been exchanged, the parties to the accident will want to notify their insurance companies about the crash. The car insurance of the drivers involved will provide coverage in line with the details spelled out in the relevant policies, and in accordance with state law, but let's dig a little deeper into some key issues.

Fault Versus No-Fault States

Most states are "fault" states when it comes to financial responsibility for a car accident, which means that the person at fault for the crash (or, more accurately, the at-fault driver's insurer) will be liable for the losses of other drivers, passengers, and anyone else harmed by the accident. That includes vehicle damage, medical bills, lost wages, and pain and suffering. (Learn more about damages.)

In "no-fault" states, the car insurance laws are written to require vehicle owners to carry "personal injury protection" or similar kinds of coverage. This type of coverage kicks in after a car accident, and it pays for medical bills and certain other economic losses suffered by the policyholder and others covered under PIP, regardless of who was at fault for the accident. Only in certain limited instances can the at-fault driver be sued in a no-fault car insurance state. Learn more about how no-fault car insurance works.

Liability for Vehicle Damage

No-fault car insurance almost never applies to vehicle damage, so no matter where you live, financial responsibility after an accident usually comes down to car insurance coverage, and the claim preferences of those involved in the accident. (Learn more about vehicle damage claims after a car accident.)

When you're at fault for a car accident, the other driver might submit a claim to her own insurance company (under her collision coverage), but her insurer would then almost certainly look to your insurance carrier for reimbursement. So, while you probably won't be on the personal hook for the other driver's vehicle repair costs, the likely result of this process is that your insurance premiums will go up when your policy renews, particularly if you received a citation from the police for a moving violation in connection with the crash -- such as distracted driving -- which added points to your driving record.

Liability for Crash Injuries

In a "fault" state (or in a no-fault state where an injured person is allowed to step outside the confines of the no-fault system), the greatest exposure you have as an at-fault driver is through a personal injury lawsuit brought by anyone injured as a result of your negligence.

Car insurance companies will gladly sell you as much liability coverage as you want to protect you against this type of claim, but most people do not carry enough coverage to pay a catastrophic injury claim (such as when the accident results in death or severe bodily harm).

For example, if you carry $100,000 of liability insurance and are sued for $500,000, you will potentially be personally liable for $400,000 in damages if the victim prevails in court. For this reason, it may make sense to weigh your exposure to personal liability against the added cost of higher amounts of insurance coverage, and consider purchasing as much insurance as you can comfortably afford. Learn more about the role of insurance in a car accident case.

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