If you were in a car accident that was your fault, you may be wondering what comes next. Will insurance cover all the bills? Will your insurance be canceled or will the premium increase? The answers depend on a few factors, but being at fault in an accident is not the end of the world — you will make it through.
Loss of Insurance Coverage or Higher Premiums
The unfortunate reality is that if you are to blame for a car accident and your insurance company pays the claim, your premiums will likely go up for a few years, until the accident is no longer on your driving record, or the insurance carrier may charge a surcharge because of the accident. It is unlikely that you will lose insurance coverage, though your insurance company does have the option of canceling or not renewing your insurance.
The premium increase is not automatic. If you have a good driving record prior to the accident and the accident is minor, your premiums may not go up.
When the Damages Are Higher Than Insurance Coverage Limits
If the amount of the claim exceeds the maximum amount your insurance covers under the terms of your insurance policy, the insurance company will often make an effort to settle the claim for the policy limits. For example, if the claim against you was worth $75,000 in damages, and your insurance only covers up to $50,000, your insurance company would ask the injured party to accept $50,000 as fulfillment of the claim.
If you do not have many assets, then the injured party may accept, since generally the only other option would be to get a judgment against you personally for the amount remaining. Many people are considered “judgment-proof” because they have too few assets.
However, the injured party may try to recover the amount in excess of your coverage from you personally if you have sufficient assets. The injured party may attempt to execute a judgment against your assets for any amount over the limits paid by your insurance policy or request that your wages be garnished. North Carolina does not allow garnishment of wages to pay civil debts. The best way to prevent this is to buy supplemental insurance coverage — an umbrella policy. An umbrella policy may protect you from personally paying for amounts owed after your standard auto insurance policy has been paid out.
The Importance of Adequate Car Insurance Coverage
If you carry only the minimum insurance required in North Carolina, you may be facing a lot of out-of-pocket expenses if you get into a car accident, especially if the accident is your fault. The best way to prevent being in that situation is to buy adequate car insurance coverage.
Liability coverage only covers the bills of the other driver and injured passengers involved in the car accident if you are at fault. If you only carry liability insurance, you will be stuck paying for your own property damages and medical expenses if you are in an accident that is your fault.
In addition to liability coverage, you should also have:
- Collision coverage. This generally includes a deductible, but will pay for your car repairs or for replacement if the car is totaled in an accident that was your fault.
- Medical payments coverage (also called PIP or Personal Injury Protection in other states). This will pay for your medical costs (or possibly those of a family member driving your car) as well as those of your passengers, or it may pay for your health insurance deductible, whether or not the accident was your fault.
- Umbrella coverage. An umbrella policy covers claims for damage caused by you or dependents after your standard primary policy has paid its coverage in full. If you have questions about legal issues involving your insurance coverage, contact the experienced personal injury attorneys at Riddle & Brantley