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How Does Insurance Work in a Car Accident?

Answering your insurance questions after a car accident

Like most car drivers, you probably pay a monthly car insurance bill. Car insurance is mandatory in most states, and it provides a financial safety net for motorists. Generally speaking, auto insurance compensates those who have been in car wrecks for their medical expenses and property damage. However, car insurance laws vary from state to state.

After experiencing a car crash, the most important thing is to make sure you and the other parties are okay. Unless you must seek emergency medical treatment, you should call the police and exchange contact information with the other drivers before leaving. It's also a good idea to get the other driver's license plate numbers and insurance information before leaving.

Once everyone is accounted for and the dust has settled, you may be wondering whose insurance will cover the costs of the accident. Below you will find a summary of how different types of car insurance work. This information can help you determine whose insurance will cover your losses from a recent accident. If you are having trouble handling insurance adjusters or are involved in a car accident lawsuit, it would be wise to contact a car accident attorney as soon as possible.

Insurance in a No-fault State

At the time of this writing, about a dozen states have no-fault systems for the purpose of car accident liability.

In a no-fault state, you usually cannot make an insurance claim or sue the other drivers involved in your accident for your injuries. You can usually only seek compensation for vehicle damage (but not medical expenses) from the at-fault driver in a no-fault state.

All car accident victims seek repayment from their own insurance policies for their medical expenses and other covered losses in a no-fault state. You will be able to secure financial compensation for your injuries and lost wages up to the limits of your insurance coverage if you live in a no-fault state.

However, there are certain exceptions to the no-fault system in the states that use them. If your injuries are particularly severe, you can step outside the no-fault framework to make an insurance claim or sue the at-fault driver.

You might be able to sue the driver who caused your accident in a no-fault state if you sustained a permanent injury such as:

  • An injury that causes disability
  • Fractures in a weight-bearing limb
  • Disfigurement
  • Loss of a pregnancy

Even if you did not sustain a permanent injury, you might still be able to sue the at-fault driver in a no-fault state. To do so, you will need to show that your losses exceed a state-determined threshold. This threshold is usually thousands of dollars or more.

Insurance in an At-fault State

The driver who caused the collision is financially responsible for the resulting losses in an at-fault state. The at-fault driver's insurance usually covers these losses.

When a driver causes an accident, liability insurance covers the other parties' losses in an at-fault state. Liability insurance compensates the injured parties for:

  • Lost income due to the accident
  • Medical bills incurred because of the crash
  • Non-economic damages like pain and suffering
  • Vehicle damage

At-fault states usually require drivers to have liability car insurance. This requirement helps to ensure that drivers who cause accidents can compensate accident victims appropriately.

However, liability insurance does not cover the medical bills or property damage that the at-fault driver sustained in the crash. If you are in an at-fault state, getting additional insurance coverage beyond liability insurance is a good idea. More coverage can give you extra protection in case you cause an accident and sustain substantial losses as a result.

Types of Coverage and How They Work

There are many varieties of car insurance that you may already have or choose to add to your policy. Your car insurance coverage will depend on your state's minimum insurance requirements and your personal preferences. Most car insurance companies offer the following auto insurance options:

  • Bodily injury liability insurance: This type of insurance would cover the injured party's medical bills if you were at fault for the accident. No-fault states typically do not require this type of insurance. However, at-fault states require a minimum amount of bodily liability coverage.
  • Property damage liability insurance: If you were at fault in an accident, this coverage pays for the other party's vehicle damage. This type of coverage is mandatory in most states, even no-fault states.
  • Personal Injury Protection (PIP): A PIP policy will help to pay your medical bills after an accident. A fault determination is not needed for this coverage to kick in.
  • Gap insurance: Gap insurance is optional, but it's wise to have this coverage if you have a car loan. This type of insurance helps pay off the remainder of your car loan if your vehicle is stolen or considered a total loss (totaled).
  • Medical payments: Often referred to as Medpay, this type of insurance helps you pay your medical bills after any vehicle accident. With Medpay, you do not have to pay a deductible, and fault for the accident does not matter. You can even use Medpay to pay your health insurance deductible and any other medical expenses you or your passengers incurred due to your accident.
  • Uninsured and Underinsured Motorist Coverage: Although car insurance is required in most states, some drivers do not buy the minimum required coverage. Others may allow their coverage to lapse. This is where Uninsured motorist coverage (UIM) comes in handy. UIM can help to cover your medical expenses and property damages in the event of an accident with an uninsured driver. Underinsured motorist coverage helps fill the gap when your auto accident losses exceed the at-fault driver's coverage limits.
  • Rental car coverage: This type of insurance pays the cost of your rental car while your vehicle is being repaired.
  • Collision Coverage: This coverage option pays for damage to your vehicle after a traffic accident. Collision insurance also covers vehicle damage from accidents that do not involve another vehicle. For instance, if you strike a tree or pole, roll the car over, or hit a pothole, collision insurance will help to cover the car repairs.
  • Comprehensive insurance: Comprehensive coverage reimburses you for damage to your vehicle that was not caused by an auto accident. For example, comprehensive coverage will compensate you if your car was damaged due to adverse weather conditions or vandalism. Comprehensive insurance will also cover losses due to collisions with animals such as deer. So, it would be wise to consider adding this type of coverage if you live in a rural or wooded area.

There might also be more insurance options in addition to the coverage types listed above. If you have questions about your auto insurance options, it would be wise to contact your insurance company or a car accident attorney near you.

How an Attorney Can Help

If you were in a minor fender bender, you could probably handle car insurance claims yourself. However, suppose your car accident caused severe physical injury or substantial vehicle damage. In that case, you will benefit from an experienced car accident attorney's help. Your attorney will be able to do a case evaluation to estimate the value of your case. This evaluation will be essential in negotiating a fair settlement with insurance adjusters.

If settlement negotiations break down, your attorney might need to take your case to court. In that case, they will gather evidence about how the accident happened to establish fault. This evidence will include police reports, medical records, video footage, and more. Further, they and their law firm staff will compile evidence of your medical bills, lost wages, and other damages to seek appropriate reimbursement.

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