What Happens If Accident Damage Exceeds Your Car Insurance?

June 13, 2024

Auto accident settlements and policy limits in California can be complex, requiring a thorough understanding of several critical aspects. Whether dealing with the pandemic's impact on accidents, understanding various insurance policies, or knowing what steps to take if damages exceed policy limits, informed decisions are crucial. Here’s a detailed look at some essential points:

Pandemic Impact on Car Accidents (2020 and 2021)

Despite a decrease in driving during the pandemic, auto accidents remained prevalent. For instance, in 2020, distracted driving caused around 14% of all injury-inducing accidents in California. Alarmingly, alcohol-related car crashes resulted in over 1,100 fatalities that year. The situation wasn't better in 2021, with more than 4,000 traffic fatalities reported.

Role of Car Insurance

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Car insurance plays a pivotal role in ensuring that crash victims get a minimum level of compensation for injuries and property damage. However, there are policy limits to consider. If the costs of an accident exceed these limits, the compensation may not cover all the damages, leaving the victims to bear the additional financial burden.

California Insurance Policies and Alternatives

Accepted Proofs of Financial Responsibility

In California, individuals have options beyond traditional car insurance. They can meet the financial responsibility requirement through several methods:

  • Obtain a self-insurance certificate from the DMV
  • Provide evidence of a $35,000 deposit with the DMV
  • Submit a $35,000 surety bond from a licensed business

Low-Cost Insurance Programs

Low-cost programs offer more affordable insurance options, though they come with lower policy limits compared to traditional insurance.

California Insurance Policy Limits

Traditional Car Insurance Minimums

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The minimum coverage for traditional car insurance policies in California includes:

  • $15,000 for bodily injury or death of one person
  • $30,000 for bodily injury or death of two or more persons
  • $5,000 for property damage

Low-Cost Insurance Policy Minimums

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For low-cost insurance policies, the minimum requirements are slightly lower:

  • $10,000 for bodily injury or death of one person
  • $20,000 for bodily injury or death of two or more persons
  • $3,000 for property damage

Exceeding Policy Limits

Insurance contracts define the maximum payout for covered accidents. If an at-fault insurance company refuses to pay within these limits, the opportunity for settlement remains open. To cover excess damages, negotiation and additional underinsured motorist coverage options are often necessary.

What to Do When Damages Exceed Policy Limits

Severe injuries, such as traumatic brain injuries, can lead to exorbitant medical costs and other hardships. If settlement negotiations fail, victims may opt to file lawsuits, as court awards are not constrained by policy limits. However, collecting damages from underinsured drivers remains a challenge, emphasizing the importance of having uninsured/underinsured motorist coverage as a backup.

The Role of an Attorney

Engaging an experienced auto accident lawyer is crucial for negotiating with insurance companies and pursuing lawsuits if needed. Attorneys can explore various avenues to maximize recovery and safeguard victims' rights, ensuring they don't inadvertently sign away their entitlements.

Importance of Consultation and Legal Expertise

Auto accident victims should seek consultations to understand their rights and potential compensation claims fully. Legal firms, like The Beliz Law Firm, offer substantial support in guiding accident victims through the intricacies of insurance claims and lawsuits.

This guide outlines key considerations regarding auto accident settlements and policy limits in California, providing a solid foundation for those navigating such challenges.

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