Everything You Need to Know About Dealing with Car Accidents

Drivers usually have a barrage of questions that arise after a car accident, including which party was primarily at fault and where and how to initiate the auto insurance claims process. No two incidents are exactly alike, which is what makes filing car insurance claims complicated and difficult at times. The determination of fault, legal consequences, and claims process will vary depending on the nature of the situation. On this page, you will find descriptions of almost every incident type possible as well as common questions that arise post-collision. We'll provide information on the insurance procedures, fault-determination process, and the legal ramifications of dozens of types of auto collisions. If you have been involved in a wreck and are at a loss as to what to do, this page can offer direction.

Dealing with Uninsured Motorists

Although every state legally mandates motorists to have auto protection of some kind, recent statistics estimate that about one in seven motorists is uninsured. With such a startlingly high number, the chances that you will someday collide with one are substantial. Typically, when a motorist does not have the protection to cover the full amount of collision damage, the other party can sue that motorist and collect the remainder from the responsible driver's assets. However, motorists who don't purchase car insurance usually do so because they don't have the money, in which case a lawsuit would do you no good. Instead, you will need to rely on your uninsured/underinsured motorists coverage, if you have chosen to include it in your policy. Your insurer will then pay for the injuries related to the collision, and in some states, the property damage as well.

How Auto Insurance Rates are Affected

Everyone knows that your car insurance premiums will rise after an incident, but does the hike take effect immediately after the collision or is there a lag time? Does it matter for purposes of your rates whether it was your fault? Post-collision premium increases usually take effect when your policy comes up for renewal. In other words, you will have a bit of a grace period between when the incident takes place and when your insurer officially raises your rates. The average rate hike after a collision is 20-40 percent. Your rates will likely stay elevated for three years after the date of the increase.

Remember that fault is irrelevant—the incident will probably raise your premiums whether you were at fault or not. Insurers see all collisions as raising a policyholder's claims risk, and they adjust premiums accordingly. Of course, some carriers will make exceptions. For example, your insurer might have an accident-forgiveness program that allows you to have one collision without it affecting your rates. Your insurer might also have some sort of good-driver exception where they will forgive a not-at-fault incident if you have an otherwise clean claims history and an impeccable driving record.

Collisions on a Suspended or Revoked License

If your driver's license is suspended or revoked, will your insurer still pay for the damages in the event of a wreck? The answer will depend on the laws of your state and your particular insurer. States have different penalties for unlicensed operators, which also affect how coverage applies. In most states, driving on a suspended license is a misdemeanor, punishable by jail time and/or large fines. Because an unlicensed motorist is engaged in an illegal activity when an collision occurs, the car insurer is unlikely to cover the damages, either the driver's own or those of others. In fact, most carriers will automatically drop a policyholder once they discover that his/her license is suspended or revoked. In the event your carrier does cover all or part of the damages resulting from the collision, you will probably be summarily dropped from coverage afterwards and would basically become uninsurable in the future because of your track record. The risks aren't worth it—don't drive on a suspended or revoked license.

Accident Reports: Failure to File and Fraudulent Reports

Failing to report an collision can have serious legal consequences, particularly if you are charged with leaving the scene, the more serious version of the same offense. As dire as the legal repercussions can be, the failure to report can have an equally deleterious impact on your auto insurance rates. Your auto insurer could raise your car insurance premiums drastically, deny your accident claim if you file one, or drop your coverage altogether.

Insurers rely on official incident reports as an objective source of information on the sequence of events that occurred. As long as you're telling the truth, a report will corroborate your account of the incident and expedite the claims process. The report also provides documented proof that the events actually occurred, thereby dispelling suspicions of potential insurance fraud.

In most states, motorist must report an accident if the incident involved a bodily injury or more than $500 in property damage. Not contacting the proper authorities could lead to a failing to report an accident violation or, even worse, a leaving the scene of an accident charge. As such, it's best to contact the police in the overwhelming majority of scenarios. If nothing else, you can request that an officer complete an incident report—a step down from an accident report—to provide documentation of the event to your car insurer.

False Reporting: A Felony in Your State?

Filing a false report can range in severity from a relatively minor offense to a serious crime punishable by prison time and prodigious fines. For instance, embellishing the details of a legitimate car collision in your favor might be classified as a misdemeanor in many states. On the other hand, staging an accident for the purpose of defrauding an auto insurer may be categorized as a felony in some states.

At the time of this writing, only about 50 percent of states in the U.S. classify insurance fraud or the attempt to commit insurance fraud as a felony. Such states usually differentiate among various types of fraud and structure the punishment accordingly. For example, in New York, if filing a fake accident report is classified as "insurance fraud in the fifth degree," the offense would qualify only as a class-A misdemeanor. On the other hand, insurance fraud in the first degree is labeled a class-B felony. The most egregious fraudulent reports usually involve staging an auto incident. These crimes carry the stiffest penalties and are often considered felonies. For instance, in Florida, staging a collision qualifies as a second-degree felony punishable by two to 15 years in prison.

Passengers and False Collision Reports

For a report to be credible, any passengers in the vehicle at the time of the incident must corroborate the driver's account of what occurred. As a result, motorists who file false reports often recruit the assistance of their passengers in lying to the authorities and/or the car insurer. What few passengers realize, however, is that confirming a driver's false account or doing nothing about the false report can have serious financial and legal consequences. To face criminal charges, the passenger must have known at the time of his/her statement that the motorist was not telling the truth.

If a passenger provides a false account or allows a driver to file a fake report without speaking up, he/she may be considered an accessory to insurance fraud. Depending on the state and the egregiousness of the fraudulent report, this could be anything from a misdemeanor to a felony charge. What's more, a passenger trying to collect an injury claim from the motorist's insurer will likely be denied if he/she was involved in falsifying the accident report. The passenger could be stuck with thousands of dollars of medical bills for not telling the truth about the incident.

How Much an Accident Will Cost You out of Pocket

One of the first worries that comes to mind after an incident is "How much is this going to cost me?" If you have a solid car insurance policy with sufficient liability protection, you should not be too concerned. Your out-of-pocket expenses will depend on the size of your deductibles and the amount of bodily injury and property damage liability coverage that your policy offers.

If you suffered injuries or vehicle damage as a result of an incident for which you were at fault, your insurer will be responsible for the loss if you have collision and medical payments coverage. Assuming you have this coverage, your out-of-pocket expenses will be limited to the car insurance deductible you chose. If you caused another party damages or injuries in an at-fault accident, you will also be responsible for any gap between your liability coverage maximum and the actual cost. Should such a gap exist, the other driver can come after your assets to satisfy the remainder, which is why it's especially critical to carry ample liability protection.

When to Pay out of Pocket in Lieu of Filing a Claim

When you have a minor accident for which you were at fault or your vehicle incurs minor damages not related to an incident, filing a car insurance claim may not be the wisest strategy financially. Specifically, filing collision or comprehensive claims for damages of $1,000 or less usually will end up costing you more money in the long run because of the concomitant rate hikes. With most carriers, these inflated premiums will linger for an average of three years, which is why you're better off paying minor claims out of pocket.

For example, say a tree branch falls on your vehicle and causes $700 of damage. Your car insurance policy includes comprehensive coverage with a $500 deductible. If you file a claim, you would only receive a settlement of $200 after you pay your portion of the costs. The ensuing premium increase would likely easily exceed that amount over the course of a few years. So when the difference between your deductible and the amount of the damages is relatively small, it's best to pay for the repairs out of pocket.

Third-Party Involvement in Collisions

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 events. 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 uninsured motorists. In this case, your uninsured/underinsured driver coverage would pay for the injuries and damages. If you do not carry this coverage, you can sue the other party, and assuming he/she has adequate assets, you will be reimbursed for your expenses. If the party cannot satisfy the judgment, some states will suspend the license until the judgment is paid in full.
  • Accidents with underinsured parties. If the other party's liability protection is insufficient to cover the full extent of your damages, your underinsured driver coverage will pick up the tab, assuming you carry it. If not, you then become responsible for seeking the rest of the damages from the at-fault driver rather than from 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 compensation 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 involving liability-only coverage. In this scenario, your liability coverage will pay for the other party's injuries and damages, but you will have to pay for losses to your vehicle out of pocket. 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 party 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 the physical component. 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 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.

Vehicle Safety: Airbags Save Lives

In the world of automotive safety, the airbag is second only to seatbelts for saving lives when it comes to visible, optional protection. Yet for all the good that seatbelts have statistically done, there is still a lot of misinformation and misunderstanding about air bags, how they work, and the most effective way to use them. Airbags are designed to work as a unit along with seatbelts. Used improperly, they can cause more harm than good and sometimes, they have even killed. Also, you may be offered a low cost car insurance policy if you drive a vehicle with many safety features.

What Are Airbags?

In 1984, the U.S. government passed a law mandating all cars built in or after April of 1989 to have a driver airbag. Since 1998, the amended federal law requires that all new cars built have both driver and passenger front airbags. Improvements in technology, however, are allowing for different airbag types to be used in some vehicles for added safety. Some cars come with side airbags, either mounted on the seats or in the vehicle's frame. These airbags help to protect from side-impact collisions, which front airbags cannot do. Another technological advance is in dual-stage airbags, which are airbags that intelligently measure the severity of a crash and can either deploy to maximum or sub-maximum levels to reduce the chance of injury from the inflation. Your auto insurance company will take your car's airbags into account when determining your premiums.

Airbag Safety

According to the National Highway Traffic Safety Administration, airbags saved 2,796 lives when combined with proper seatbelt use. Keep in mind that airbags are not meant to be used alone. They are not an effective safety device when used without seatbelts. Other safety considerations for airbag use include:

  • Never place forward- or rear-facing carseats in the front seat. Airbag deployment could kill or seriously injure a child in a safety seat when placed in the front seat. In most states, doing so is against the law.
  • Do not allow young children to sit in the front seat. Children under the age of 12 should generally sit in the backseat if at all possible. The safety data and design for airbags depend on the passenger being a certain size and weight.
  • Motorists should sit at least ten inches away from the steering wheel. Airbags do not require a lot of time to deploy properly, but they do require a minimal amount of space. Motorists who sit too close to the steering wheel are at risk of serious injury if the airbag deploys.
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