How Does Liability Coverage Work?

What Is Covered Under Liability Insurance?

Most of us have several insurance policies in our names, from health insurance to auto insurance. While there is a basic understanding that insurance policies help you pay for medical expenses, property damage, and wage loss, most people are not aware of the importance of these policies until after an accident.

Read on, our insurance dispute lawyers have compiled some helpful information when you have been injured in an accident and need help filing a claim against an at-fault party’s liability insurance policy (or even your insurance policy).

Understanding Liability Insurance

However, other types of insurance—such as business, medical malpractice, or homeowner’s insurance policies also cover the policyholder’s liability if their actions have resulted in an injury to someone else.

Liability coverage is generally only available for accidents caused by the policyholder or any named driver on their policy. It does not compensate for the injuries or property damage that occurred to the policyholder, it only covers damages to other people. However, several states—including Florida—require drivers to purchase a personal injury protection policy (PIP) to cover expenses incurred regardless of who was at fault for the accident.

Types of Liability Coverage

There are two types of liability coverage provided through auto insurance policies: bodily injury and property damage liability. Here is a brief look at how each of these coverages works.

Bodily Injury Liability

Bodily injury liability coverage pays the expenses associated with physical injuries caused by the policyholder or others named on the policy. The costs compensated through bodily injury liability coverage include all reasonable medical expenses to treat the injury and known complications. This coverage can also provide wage loss for the victim if they are too injured to work.

Bodily injury coverage comes in two forms: per person and accident. This means that the policy allows specific coverage if an accident injures just one person. If an accident injures more than one person, the coverage provides a higher amount available to compensate all injured parties.

Property Damage Liability

If your accident caused damage to someone else’s property, including their vehicle, fences, buildings, or telephone poles, property damage liability coverage would pay for the repair or replacement of these items.

The Importance of Having Enough Liability Insurance

The problem with the minimum liability insurance requirements in most states is that they often do not fully compensate someone for their injuries.

For example, many states have a minimum liability insurance requirement of $25,000 per person and $50,000 per accident of bodily injury coverage, along with $10,000 in property damage coverage. If a driver causes an accident in which one person suffered a severe injury that required ambulance transport, hospitalization, surgery, and extensive rehabilitation, the expenses of their injury will likely exceed $25,000.

If the at-fault party’s policy limit prevents their insurance carrier from fully compensating for the injuries of others, the victim can hold the at-fault party personally responsible for the remainder of the expenses.

If an individual does not have sufficient bodily injury coverage and they cause an accident with an individual who does not have a PIP policy (which is not required for drivers whose vehicles are registered in most other states), they still must pay for the injuries they cause others.

Additional Coverage That Can Also Help if Are in an Accident

About one out of every eight drivers in the U.S. doesn’t have insurance. In Florida—which has one of the highest numbers of uninsured drivers—around one out of every four cars on the roadway is uninsured, while only 3 percent of drivers from New Jersey are uninsured. Regardless of where you live or drive, insurance companies offer additional coverage to protect you in an accident with an uninsured or underinsured driver.

Medical Payments or Personal Injury Protection

For most states, medical payments or personal injury protection coverage is optional, while a handful of states require a PIP policy. These policies cover a portion of medical expenses and wage loss resulting from injuries caused by accident regardless of who was at fault. Some of these policies provide death benefits if a policyholder or passenger dies due to the accident, including funeral costs.

Collision

Collision coverage compensates for the cost of repairing or replacing the policyholder’s vehicle if it was in an accident. This type of coverage also applies to incidental damage caused by potholes in the roadway. If the policyholder was not at fault for the accident, their insurance provider will generally cover the vehicle damage but seek to recover the amount paid from the at-fault party.

Comprehensive

Comprehensive coverage pays for damages caused to your vehicle due to theft, fire, falling objects, vandalism, or natural disasters. While states do not require drivers to have comprehensive or collision insurance, many lenders require this coverage while an individual is paying off their vehicle.

Uninsured and Underinsured Motorist Protection

Uninsured and underinsured motorist protection covers the expenses to the policyholder injured in an accident involving a driver who does not have insurance or does not have enough insurance to compensate the costs entirely. Having this policy is particularly important in the case of hit-and-run accidents where you cannot identify the driver or their insurance policy.

Even if the Coverage is There, It’s Difficult to Obtain

Insurance companies are in business to make money, and one of the ways they do that is by avoiding large payouts on claims from their insured or from third parties who were injured by their insured. This means that if you are injured in an accident and need to file a claim against your insurance or someone else’s, you won’t easily win the settlement required to cover your injury.

To reduce what they pay on insurance claims, insurance companies often employ adjusters. An adjuster’s job is to analyze the claim and determine how much the insurance company is responsible for paying.

This person works for the insurance company, not for you, so use caution when speaking with them, as they may use several tactics to reduce claims, such as:

• Contacting the victim soon after the accident, while they’re still injured and likely experiencing an extreme amount of stress about the impacts that an injury has on life, such as missed work, pain, and mounting medical bills. The adjuster will generally act very friendly and concerned. This attitude doesn’t mean they aren’t looking for admission of guilt or another reason to deny the claim.
• Offering an early settlement. The insurance company wants a quick resolution to your claim as much as you do. However, an early settlement generally does not allow the claimant to fully understand the scope of their injury and the expenses and impacts involved in recovery. If you later discover that the compensation wasn’t enough, you cannot go back and ask for more money.
• Asking the claimant to give a recorded statement. While this doesn’t necessarily seem like it would be uncommon in a car accident claim, whatever you say in that recorded statement can be used to deflect liability away from their insured to reduce your claim.
• Convincing the claimant to authorize the release of their medical records. The insurance adjuster does not need to see your entire medical history, and often they use medical records as another way to reduce your payout. If they find a pre-existing condition in your medical records, they will often try to blame the current pain you’re feeling on that instead of on the accident that was caused by your insured.
• Telling you that you do not deserve compensation for pain and suffering or that you can only recover a certain amount. Insurance companies roll the dice on whether a claimant knows the law and bank on the notion that you will take what they say as truthful, legitimate information.

Speak With An Attorney

What if the Insurance Company Refuses to Pay the Claim?

Insurance companies are required to do several things when they receive a claim for compensation against an insured’s policy:

• Provide notification to the claimant within a timely manner if they deny the claim.
• Promptly approve and pay claims that they have not dismissed.
• Requiring the claimant only to submit the documentation necessary to evaluate their claim.

If the insurance company denies your claim, then you and your attorney will likely discuss filing the claim as a personal injury lawsuit in court. However, in some circumstances, you might take action against the insurance provider for bad faith insurance practices.

How Can a Personal Injury Lawyer Help You With Your Claim?

Personal injury lawyers know the law and the tactics that insurance companies often use to avoid paying for their insureds’ liability. Your attorney will handle communication with the insurance adjuster to protect your claim from the standard insurance company tactics listed above. The attorney will also contact the adjuster to negotiate a settlement that fairly compensates you for the expenses and impacts of your injury.