if your liability only insurance does not cover the cost of the other party's vehicle, what can you do?

Question

My sister was in a car accident where she rear ended a lady. My sister was at fault and the other lady's car costs 8K, but her insurance will only pay $2500. They are trying to make her pay the remaining $5500. She can't afford it, or a lawyer.

Yeah, there were 2 other cars involved, which is why her insurance will only pay $2500.00. Unfortunately it was all her fault, she hit one, that one hit another, and that one hit another.

Answer 1

The thing to remember is the limit on your insurance has nothing to do with how much they sue you for or how much you'll owe.
It only deals with how much the insurer will pay. Once the insurer pays the limit, you still owe the rest.
Your sister is learning the hard way why you never, ever buy the lowest possible coverage limits. You buy enough coverage to keep from having to lose everything you have.
Your sister will have to pay each one of those folks, regardless of what the limit is.

Or better yet, put yourself in their shoes.

What if you were driving and were hit by another driver and your car was worth $8000 and it was rendered undrivable and you got a check from the at fault driver for only $2500 and you still had a wrecked car. How would you feel? You'd want the full $8000, not just $2500 and an apology.

So she's going to lose everything she owns and you will gain a valuable lesson.....a one-million dollar personal liability umbrella costs only $120 per year, if you have a homeower's policy already in place.

For $10 per month, you can make sure you get to keep all your possessions if you hit somebody.

Answer 2

I don't understand why her insurance company is paying $2500.

The lowest minimum limit per state is $5000 in California, Deleware, Massachusetts, Mississippi, New Jersey and Pennsylvania.

Was there another damaged vehicle?

If your sister has no other assets besides single car (home, second car, etc) when there is little to be done.

If the other lady or her insurance company is reimbursed the $2500 by your sister's insurance then the claim is closed witha release.

I think we're missing some important facts here?

Does the vehicle repair cost $8000 or is the $8000 vehicle a total loss?
Is there more than one damaged vehicle?
Is the other lady's insuranc ecompany paying for the damages then subrogating?

Answer 3

Have your sisters agent explain the coverage on her car. Each state has different minimum liability limits but I've never heard of property damage coverage as low $2500. Even 15/30/5 would pay up to $5,000 for PD and that's the lowest I have ever seen and may not even be offered anymore. If her coverage is at $2500 she is on the hook and will have to pay. Maybe she can negotiate a more reasonable settlement. Make sure the other party is not just using the highest esimate and that it is reasonable.

Answer 4

Why will her insurance only pay $2,500? Even the lowest property liability limit is double that, and most are easily enough to cover $8k.

If the actual damage to the other party's vehicle was $2,500 and they want the car replaced, that's too bad for them. They might wheedle a couple extra hundred for "reduction in value" but that's about it.

If her liability limit was truly only $2,500 (I'm still having trouble believing that) then she can't afford to NOT have an attorney. She'll almost certainly be sued though the courts may order a payment plan to clear the judgement if she is nearly destitute.

Answer 5

Bummer. She owes it. They can put a lein against her car, or any of her posessions, or against her wages.

Minimum liability is a bad thing.

You need to check YOUR auto insurance policy, too - I always recommend a minimum of $50,000 of property damage coverage - in case you rear-end a Lexus. But it usually only costs a dollar or two more to double that, and get $100,000.