If someone in California only has the minimum auto insurance and causes an accident where the repair costs go way beyond that limit, what are the options for the person who isn’t at fault?
Does the person who wasn’t at fault have to use their own insurance (and pay the deductible, possibly seeing their premium go up)? It seems like the at-fault driver might get off easy and even get their own car repaired without covering all the damage they caused.
What should a person do if they’re hit by someone with too little insurance? Is it possible to get the at-fault driver or their insurance to pay for everything?
Example situation: Car A (at fault) needs $5,000 in repairs. Car B (not at fault) has damages totaling $12,000. But Car A’s insurance only covers $5,000 for collision.
@Axelle
Got it, thanks. So the person who caused the accident has to cover anything beyond their insurance limits. If they can’t pay, then the other driver might need to go to court to collect?
Lesley said: @Axelle
Got it, thanks. So the person who caused the accident has to cover anything beyond their insurance limits. If they can’t pay, then the other driver might need to go to court to collect?
Yes, you’d probably need a judgment in order to get the remaining amount beyond what their insurance covers.
People who only carry the minimum coverage often don’t have enough assets to make it worth going after, so it’s common to just settle for whatever the insurance pays out. This is why it’s smart to have higher limits if you can afford it.
Having low limits doesn’t mean they don’t have to pay. It just means their insurance only covers up to their policy limit, and then it’s up to the driver to handle the rest.
For instance, if someone has the $5,000 minimum in California and causes $100,000 in damage, the insurance pays $5,000, and the driver owes the remaining $95,000. If they don’t have enough assets, the other party can pursue options like wage garnishment, license suspension, or face much higher insurance rates in the future.
@Val
Thanks. Would hiring a lawyer be necessary for this? And would the at-fault driver have to cover legal fees if the case goes to court? Let’s say the amount owed is $7,000; would lawyers take a case with such a small amount?
@Lesley
In most cases, each party covers their own legal fees.
So if your car was damaged by someone with only $5,000 coverage, and you have $12,000 in damages, you’d need to sue for the full $12,000. Their insurance might pay $5,000, but you’d have to try to collect the remaining amount from the at-fault driver. Actually collecting can be tough.
If a lawyer does take this case on contingency, they’d usually take 30-40% of whatever is recovered. It’s often easier to claim through your own insurance if you have collision coverage.
@Lesley
Ideally, the person who wasn’t at fault would have their own collision coverage, so they could just pay their deductible and let their insurance handle the repairs. Then their insurance company would go after the at-fault driver. If the other driver’s limits aren’t enough to cover everything, the insurance might still pursue them for the remaining amount.
Good luck getting anything above the insurance limit. Most people who get the bare minimum don’t have much money to begin with. You’re usually better off using underinsured coverage on your own policy, which usually has a smaller deductible than collision.
If you cause damage that’s above your policy limit, here’s what usually happens:
If the other driver goes through your insurance, they’d need to sign a release to get the full policy amount and let go of any additional claims.
If they use their own insurance, then their insurance would try to collect from yours later, and your insurance will still require a release for the full amount.
If they don’t want to settle this way, they can try small claims or another lawsuit to get the extra amount from you directly.