What Happens When the At-Fault Driver’s Insurance Runs Out?

document for selecting insurance coverageIf you were injured in an accident and another driver is at fault, he or she is financially responsible for your damages. However, the other driver’s insurance coverage may run out before your medical bills and other expenses are fully covered.

Fortunately, you may still have options, including filing a claim with your insurance company. Below, learn more about these situations and what to expect if it happens to you. The experienced Sacramento car accident lawyers at the Arnold Law Firm can discuss your options for pursuing full compensation with you in a free consultation.

How to Use Underinsured Motorist Coverage

Every motorist in California is required to carry minimum amounts of liability coverage:

  • $15,000 for the death or injury of any one person
  • $30,000 total for the death or injury of more than one person in a single accident

This coverage is used to pay for damages the policyholder causes to someone else, such as other drivers or passengers.

Many drivers only buy the minimum required coverage, but if they ever cause an accident, it may not be enough to cover the victim’s damages.

This is why California requires insurance companies to offer underinsured motorist coverage to help victims involved in accidents with underinsured drivers. It provides limited coverage for medical bills caused by your injuries. You probably have this coverage unless you signed a waiver turning it down, as required by state law.

California law requires that all other applicable insurance coverage be exhausted before underinsured motorist coverage applies. This means you cannot use your underinsured motorist coverage unless you collect compensation from the at-fault driver’s policy, up to the limits, and send proof of this to your insurance company. If you settle for less than the other driver’s policy limits, you may be forfeiting your right to compensation from your underinsured motorist coverage.

Arbitration for Insurance Disputes

If you and your insurance company cannot agree on an amount to resolve your claim, you must go through arbitration, according to state law. This means a third party will be brought in to attempt to resolve the dispute.

There are rare exceptions, but usually you cannot file a lawsuit against the insurance company before going through arbitration. This includes situations when the insurance company acted in bad faith, because state law requires insurers to make a good faith attempt to reach an agreement. Even if the insurance company acts in bad faith, you may need to go to arbitration first before filing a bad faith lawsuit.

Dangers of Not Having Underinsured Coverage

Your insurance company is required to offer you this type of insurance, but you can choose not to purchase it.

However, driving without this coverage could be financially disastrous if you are injured in an accident with an underinsured driver. You may sustain losses that far exceed the at-fault driver’s bodily injury limits. Without this additional insurance, you may have to pay for your care out of pocket. If you do not pay your medical bills the providers may pursue debt collection against you.

Set Up Your Free Legal Consultation Right Now

If you would like more information about underinsured coverage, or if you were recently in a collision caused by a negligent driver, the Arnold Law Firm is ready to answer your questions.

We work on contingency, so you owe no upfront fees or attorney’s fees unless you receive compensation for your claim.

Contact us today to schedule a free consultation. Call (916) 777-7777.