Third-Party Involvement

Determining the appropriate level of third-party involvement when a collision occurs can be confusing and incredibly complex. The financial responsibility of the parties involves can vary considerably, depending on the coverage each driver has and the nature of the accident. For instance, what would happen if an underinsured driver hit you and you carry only liability insurance? Or what would happen if you hit someone and do not carry liability coverage? To answer these kinds of questions, we’ve outlined a few likely coverage and collision scenarios to explain how they would play out for you and the other involved parties.

Accidents with Underinsured Drivers

If an accident occurs that is not your fault and results in damage to your property or bodily injury, you have the right to seek restitution for the damage and injuries from the insurer of the at-fault driver. Of course, if the cost of the property damage and bodily injuries exceeds the coverage the other driver carries, you face a unique predicament. First of all, if you carry underinsured driver insurance, then your insurance provider will pick up the tab once the at-fault party’s liability coverage is exhausted.

On the other hand, if you do not have underinsured driver coverage, you then become responsible for seeking the rest of the damages from the at-fault driver rather than his/her insurance company. The most common way to do so is to file suit against the at-fault party. Your auto insurer may or may not pay for your legal defense depending on your policy. Provided that the at-fault party has sufficient assets to satisfy your full claim, you will receive the damages you are owed if you win the suit. If the party has no assets, however, the expenses of the accident would have to come out of your pocket.

Accidents with Uninsured Drivers

If the at-fault party with whom you have a collision does not carry auto insurance at all, your uninsured driver coverage will pay for both your property damage and bodily injuries. Uninsured driver coverage is almost always included in full coverage auto policies. However, in the event that you do not carry uninsured motorist coverage, you will have to seek your damages through the court system. If the court rules in your favor and the at-fault party has adequate assets, you will receive reimbursement for your expenses. On the other hand, if the at-fault party cannot pay for the full extent of the damage/injuries, some states allow the at-fault driver’s license to be suspended until the judgment is satisfied.

Accidents Involving Liability-Only Coverage

Unless your vehicle has very little cash value, carrying a liability-only policy is very risky. When you carry only liability protection, you will have to pay for all damage to your vehicle in the event of an accident that is your fault. Your liability coverage will pay for the other driver’s injuries and damages, but you will have to pay for losses to your vehicle on your own. If the other party is at fault and carries only liability coverage, you needn’t worry—your damages and injuries will be paid for by his/her policy. If the at-fault driver lacks collision and comprehensive coverage, that simply means that he/she is financially responsible for repairing or replacing his/her vehicle.

Accidents Involving Only Physical Damage Coverage

A vehicle that is only protected by comprehensive and/or collision coverage is extremely rare, as it is against the law not to carry liability insurance. The only time this scenario might occur is with a classic or limited-used vehicle that is only insured for physical damage. In the event that you carry only physical damage coverage and an accident occurs that is your fault, you will be completely financially responsible for the other parties’ injuries and damages. If the other party or parties sue you, your assets could be in danger if you lack liability coverage. On the bright side, the damage to your vehicle would be covered by the collision portion of your auto policy.

If you have an accident with another driver who carries only physical damage protection and no liability coverage, the situation might qualify for coverage under the underinsured driver portion of your policy. If not, you will need to file a lawsuit against the other party to receive reimbursement for your injuries and/or property damage. You will also want to report the driver to the authorities for failing to carry liability coverage so the state can take appropriate legal action.