Getting into a car accident, when you only have limited insurance coverage, can be nerve-wracking. It is often difficult to determine if your insurance coverage is adequate to pay for injuries or repairs, especially if the accident is your fault. Fortunately, the law only requires that you carry liability insurance, so legally, you are covered. Most other coverages in an auto policy are optional.
If you are involved in an accident and you only have liability insurance, all is not lost. Each state has legal minimum liability requirements for automobile insurance coverage. Most likely you have met the minimum; otherwise, you would not have been able to register your vehicle. Liability insurance is necessary to pay for injuries and damage that result from an at fault accident. Liability pays for the other driver's damages and injuries. If you were at fault for the accident, your liability insurance should be sufficient unless the accident was severe. If the accident was not your fault, the other driver's insurance policy will pay for your injuries and damages.
Inadequate Coverage Amounts
It is important to note that the damage resulting from a car crash may exceed the coverage of a liability policy. If you are at fault and the limits listed on your policy have been met, your insurance company will not pay an amount above those limits. If the other driver's injuries and/or property damage exceed your policy limits, he can file a claim against his own under-insured motorist coverage to pay what your policy will not cover. The other driver can also sue you to recover any additional costs.
Damage to Your Auto
Liability insurance does not cover damage to your auto. Coverage for damage to your car is paid under the comprehensive and collision portions of the policy that are absent from a liability only policy. If your car is damaged in an accident and you only have liability coverage, you will have to pay out-of-pocket for car repairs. Alternatively, if the accident was not your fault, the other driver's property damage liability will pay to fix your car. If the accident was not your fault and the other driver does not have insurance, you can sue the driver to pay to fix your car. You will most likely have to pay to have your car fixed first and recover the costs from the other driver by going to court.
Many drivers carry liability coverage at state-required limits to drive legally. Although minimum limits of liability are enough to satisfy legal requirements, they are often not enough to pay for damages or injuries in an auto accident. With rising health care costs and the extensive technology used in motor vehicles today, state-required liability limits may not be sufficient. Strongly consider increasing your liability limits above what are required by law as well as add coverage for damage to your auto to avoid potential legal hassles and costly vehicle repairs.