My Claim is Over the Auto Insurance Policy Limit – Now What?

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As much as we want to avoid them, auto accidents are a part of life. Unfortunately, you might find yourself in a situation where you are found financially liable for paying for the damages as a result of an accident, whether you caused injury to another person or to yourself.

So what happens if you find out that the total damages to the other party's vehicle or person total an amount that is over the auto insurance policy limit?

Filing an Auto Insurance Claim

Before you can understand what will happen if the claim is over the auto insurance policy limit you should understand the process by which claims are filed first.

After an accident both you and the other involved party should call the police, if you are able. The police will come to the scene of the accident, take information from both parties involved, and file a formal police report. If the police are on the scene you will not have to worry about speaking to the other person to take his information because the officer will do it for you and include it on his report.

As soon as you are able you will need to call your auto insurance carrier. You'll speak to a claims adjuster who will open a case, take a copy of the police report, and begin communicating with the insurance company representing the other party involved.

If you are found liable for causing the accident, which in this case we will assume, your insurance company will be responsible for paying damages to the other party.

Exhausting Your Policy Limits

Let's imagine you're in a very serious auto accident. The other person's Personal Injury Protection limits have been exhausted and his carrier turns to your company to have you pay under your bodily injury liability limits. You have your state's minimum limit of liability, in this example $25,000, and the injured party still has more than $100,000 worth of medical bills to be paid.

The claim is over the auto insurance policy limit and you have a problem. Yes, your insurance company will pay up to $25,000 but that's it. The other $75,000 is your responsibility. You'll likely be sued, have a judgment filed against you, and find yourself wondering just how you're going to pay off that balance.

When you use our site to request quotes for auto insurance, keep this scenario in mind. Do you really want to purchase the absolute minimum your state allows or do you want to protect yourself from a serious accident that might put you over the auto insurance policy limit?

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