How Car Insurance Really Works After an Accident

Unless you live in New Hampshire or Virginia, you are required to carry auto insurance on your vehicle before you take it out on the road. The majority of states will refuse to even register your car unless you first provide proof of insurance. 

Auto insurance is supposed to provide you with protection if you are ever involved in an accident, but an alarming number of people aren’t sure what coverage they actually have and whether it’s enough. An even greater number of drivers choose to obtain the bare minimum amount of coverage required by their state, which could put you in a difficult financial situation after an accident. 

Let’s first take a look at what types of car insurance most states require:

  • The first is bodily injury liability coverage. This covers the medical expenses of someone who is physically injured in an accident. 
  • Then we have property damage liability coverage, which covers the costs of repairing any property damage to the vehicle or the contents inside that occurred in the collision. 
  • Some states also require drivers to carry uninsured/underinsured motorist coverage in both of the previously mentioned areas. 
  • Vehicles that are financed will often require comprehensive which covers damage to the vehicle caused by something other than an accident, and collision, which covers damage caused by an accident. 

After an accident, you will need to file a claim with the insurance company, but then there is the question of whether you will file with your own insurance company or that of the other involved driver. The answer depends on whether you live in a fault state or a no-fault state. 

One Sacramento car accident lawyer we talked to said fault states, like California, require you to file a claim with the at-fault party’s auto insurer, while a car accident lawyer in Newark says that no-fault states, like New Jersey, allow you to file a claim with your own insurance company, regardless of who is at-fault for the accident.

No-fault states can do this because they also require their drivers to carry personal injury protection which covers medical expenses without regard to blame for the accident. 

Once you have determined whose insurance you are filing a claim with, you can file your claim and begin seeking compensation. Bear in mind, the insurance company is going to lose money by settling your claim, which gives them an incentive to see how little they can compensate you. 

Furthermore, insurance might not cover all of your losses, so you may need to bring your case to court in order to obtain full compensation for the financial and non-financial losses you suffered in the accident. 

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