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Car accidents can be extremely expensive. In fact, according to the National Safety Council, the average economic costs of a fatal crash were close to $1.78 million, while the average costs associated with a disabling car accident were $155,000.
Despite these huge potential costs, drivers aren’t required to buy nearly that much insurance. In fact, depending on the state, drivers may be able to get away with having just $15,000 per person and $30,000 per incident in bodily injury liability coverage.
With such low auto insurance limits, it’s very possible a motorist could provoke an accident and do much more damage than insurance will cover. The big question then is, what happens if a motorist causes an accident and is being sued for more than the insurance policy’s maximum limits?
Drivers could be sued personally for any extra losses insurance won’t cover
If a driver is sued for more than the limits of their liability insurance policy, their auto insurer will only cover legal fees and damages up to the amount required based on the policy terms. So a driver who caused $155,000 in disabling injuries to someone and who had $15,000 in bodily injury liability coverage would see their insurer pay just $15,000 — leaving $140,000 in uncompensated losses for the crash victims.
These losses don’t just go away, and in some cases, victims will infer to follow a lawsuit against the at-fault driver personally. In other words, they will go to court and try to get a judgment that the driver would have to pay out of their own bank account. And, depending on the circumstances, courts could potentially enforce that judgment by ordering the at-fault driver’s wages be garnished (a portion of them is taken) or by putting a lien on the at-fault driver’s property (asserting an ownership claim to their home or other assets).
Because of the risk to personal assets, having only the minimum auto insurance coverage is a huge risk.
Be sure to buy the right auto insurance coverage
Drivers should think very carefully about whether they will end up regretting purchasing only minimum coverage insurance. It’s true that it is cheaper not to buy a ton of liability protection, but that’s only if nothing goes wrong.
Switching from a car insurance policy with a $10,000 per person and $20,000 per accident limit to a policy with a $250,000 per person and $500,000 per accident limit raises premiums by around $47 per month for a 40-year-old female SUV driver in Florida with a clean record purchasing coverage from a major insurer. That’s a significant bump, but it’s a lot less than getting stuck with a personal lawsuit that ends up costing tens or even hundreds of thousands or millions of dollars.
Being sued personally after an accident and not having enough insurance could be a really devastating, frightening go through, and the only way to impede this from happening is to have the right insurance in place before this occurs. Drivers should review their policies today to make sure they aren’t at risk of huge losses if a crash occurs. Those who find they don’t have enough coverage to protect their assets may want to act quickly by increasing their insurance coverage ASAP.
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