What Happens If Your Car Is Totaled and You Only Have Liability Insurance?
If your car is totaled in an accident and you only carry liability insurance, the situation becomes significantly more complex. Unlike full coverage policies, liability insurance does not cover damages to your own vehicle. In this case, your only option for recovering damages is to pursue a claim against the at-fault driver’s insurance company. Let’s explore what this process looks like, the challenges you may face, and why having full coverage can make all the difference.
Understanding Liability Insurance
Liability insurance is designed to cover damages you cause to other people or property in an accident. It does not provide any protection for your own vehicle or injuries. If the accident was caused by another driver, you’re left relying on their insurance to compensate you for your losses.
You Are at the Mercy of the Third-Party Insurance Company
When you file a claim with the at-fault driver’s insurance company, it’s important to remember that you are not a party to their insurance contract. This means:
- The Insurance Company’s Duty Is to Their Insured: The third-party insurer’s primary obligation is to protect their policyholder, not you.
- Settlement Offers May Be Low: Without a contract binding the insurer to pay you a fair amount, they may offer less than what your damages are truly worth.
- Delays and Denials Are Common: The insurer might delay processing your claim, deny liability altogether, or dispute the extent of the damages.
What Are Your Options If the Third-Party Insurer Refuses to Cooperate?
If you’re unable to reach a satisfactory resolution with the at-fault driver’s insurance company, you have the right to pursue legal action against the driver directly. Here’s how:
- File a Lawsuit: You can sue the at-fault driver for the cost of your damages, including the value of your totaled car, lost wages, and other losses.
- Small Claims Court: For damages under $5,000 in most jurisdictions (and up to $10,000 in New York City), small claims court is an efficient option. It’s designed for individuals to represent themselves without needing an attorney.
- Civil Court: For larger claims, you can file a lawsuit in civil court, though this process is more formal and often requires legal representation.
- Prove Fault: In court, you’ll need to provide evidence that the other driver was at fault. This can include:
- Police reports
- Witness statements
- Photographs and videos from the scene
- Repair estimates and appraisals
- Enforce the Judgment: If you win in court, you’ll receive a judgment against the at-fault driver. However, collecting the money may require additional legal steps, such as wage garnishment or asset seizure.
Why Full Coverage Insurance Matters
While pursuing a third-party claim or lawsuit is possible, the process can be time-consuming, stressful, and uncertain. Having full coverage auto insurance can spare you this headache by ensuring your own insurer compensates you for damages, regardless of fault. Full coverage typically includes:
- Collision Coverage: Pays for repairs or replacement of your vehicle in an accident, even if you’re at fault.
- Comprehensive Coverage: Covers non-collision-related damage, such as theft, vandalism, or natural disasters.
- Peace of Mind: You won’t have to rely on the at-fault driver’s insurance or navigate a complicated claims process on your own.
Conclusion
If you only have liability insurance and your car is totaled, recovering damages often depends on the cooperation of the at-fault driver’s insurance company. Unfortunately, as a third party, you’re not protected by their policy’s terms and may face challenges in getting a fair settlement. While you have the option to sue the at-fault driver in court, these cases can take time and effort to resolve.
To protect yourself and your finances, consider upgrading to full coverage insurance. It’s an investment in peace of mind and ensures you’re covered no matter the circumstances. If you’re dealing with a totaled car and an uncooperative insurer, our auto property damage law firm is here to help. Contact us for a consultation and let us guide you through the process to get the compensation you deserve.