Personal Injury

How Does Insurance Affect a Car Accident Case?

By David Berg, Attorney
Regardless of who was at fault for your car accident, chances are that at least one insurance company will end up paying out a settlement or court judgment.

The short answer to this question is that the amount of available car insurance coverage is a critical component of any car accident case. Read on to get an understanding of why this is true, and how things might play out in the real world.

If the person who hit you doesn’t have any car insurance or only has a minimal amount of coverage, then it doesn’t matter how good your case is or how badly you are hurt, you just aren’t going to get much compensation for your injuries unless one of two possible situations exists.

  • First, if you carry uninsured or underinsured motorist coverage, then you can make a claim against your own insurance company for the full amount of your damages, less any money that you receive from the defendant’s insurance company. That is usually the only real alternative if the defendant doesn’t have enough insurance. But, unfortunately, not everyone carries uninsured and/or underinsured motorist coverage, and once you've exhausted the limits of any UIM coverage you do have, you're likely out of options.
  • Second, it is possible that the person who hit you has enough assets to cover your car accident damages, including medical bills and lost income. But from a realistic standpoint, people who don’t have car insurance -- or who only have the minimum amount of car insurance -- almost never have any extra money sitting around to pay off a personal injury claim.

Let’s look at an example of how the amount of available insurance can affect a car accident case. Let’s say that you get hit, that it is definitely the other person’s fault, and that you are seriously injured, to the extent that your lawyer advises you that $1,000,000 would be a very fair settlement. As long as the defendant has $1,000,000 or more of automobile insurance coverage, your case will proceed normally. Your lawyer will prepare your case, make a demand, and hopefully settle the case without having to go to trial. (Learn more about The Role of Insurance in Settling a Personal Injury Claim.)

But let’s say your lawyer writes the defendant’s insurance adjuster to ask about available insurance coverage, and the adjuster tells your lawyer that the defendant only carried $100,000 in liability insurance. In that case, your million dollar settlement with the defendant just turned into a $100,000 settlement.

The only way that you are going to be able to get proper satisfaction for your injuries is if you have a significant amount of underinsured motorist coverage. If you have $1,000,000 or more of underinsured motorist coverage, then, once again, your case will proceed normally. Your lawyer will settle with the defendant for the policy limits and then file a claim against your own insurer. You will then litigate the underinsured claim against your own insurer.

But let’s say that you only have $250,000 or $500,000 of underinsured motorist coverage. In that case, once the adjuster is convinced that this is a million dollar case, your insurer might just pay you the policy limits. If that happens, then your case is over, and, unfortunately, you only recovered 25 or 50 cents on the dollar for your injuries.

So it's easy to see how the amount of available insurance coverage can play a crucial role in any car accident case. The possibility of getting hit by someone with no car insurance -- or with only a minimal amount of car insurance -- is a real risk. In order to avoid this circumstance, anyone who can afford it should consider carrying a significant amount of uninsured and underinsured motorist coverage.

This is all assuming that the car accident was the other driver's fault, which of course isn't always the case. Learn more about When the Car Accident is Your Fault.

If you've been involved in a car accident within the last three years, please consider taking our car accident survey so that we can include your experience in Martindale-Nolo's 2016 Car Accident Survey. Your participation will help inform others about their situation and options before dealing with their car accident.

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