I was in an at-fault accident and the other driver sued. Geico paid the claim since I have full coverage. Now, I cannot afford the full coverage rate. If I switch to liability, would Geico sue me? I think I read that you have to keep the higher rate for at least six months to avoid being sued, but I can’t find that information now. Thanks for your help!
The word “full coverage” has no real meaning. Your insurance will make payments based on the coverage you had in place at the time of the accident. Any further adjustments you make to your coverage—such as reducing your liability or eliminating collision and comprehensive insurance for vehicle damage—have no bearing on the claim. No, they don’t “claw back” money that was taken from you to lower your coverage later, and no, they don’t have you carry a particular coverage for a set amount of time following an accident. If you have a loan on the vehicle, your bank will require collision and comprehensive insurance in addition to the minimal liability required by the state.
Typically, your insurance provider cannot legally sue you for reducing your coverage after a claim has been settled. Once they have fulfilled their financial obligation towards your claim, they generally have no grounds for legal action.
However, there are important considerations to keep in mind:
State Regulations: Insurance laws vary by state. It’s essential to verify the specific regulations in your state concerning policy adjustments following a claim.
New Policy Coverage: Ensure that your new liability-only policy provides sufficient coverage to safeguard your assets in the event of another accident.
Potential Premium Increases: Lowering your coverage may lead to higher premiums in the future, particularly if you experience another claim.
It’s advisable to discuss your situation with your insurance agent to fully understand the implications of modifying your policy. They can offer insights into your policy terms and potential repercussions.
Remember: While reducing costs may be appealing, maintaining adequate coverage is critical for your financial protection.