Car Insurance Tips

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How Much Will a Car Accident Cost Me?

Getting into a car accident is a traumatic event. It can result in bodily injuries, mental and emotional trauma, and property damage.

But car accidents also have a financial cost. The answer to ‘how much will a car accident cost me?’ depends on a few factors including:

  • Did you cause the accident?
  • Was anyone else involved in the accident?
  • Do you live in a no-fault insurance state?
  • Were you injured?
  • Was anyone else injured?
  • Was any property damaged?
  • What kind of insurance coverage do you have?
  • Was the other driver insured?
  • Do you have roadside assistance or an auto club membership?

Here are some of the ways you can answer ‘how much will a car accident cost me?’ based on the answers to these questions.

How Much Will a Car Accident Cost Me Based on Where I Live?

Most states use an at-fault insurance system. Under this system, the driver who caused the accident is liable for all damages caused by the accident. As a result, the insurer for the at-fault driver must pay for both bodily injuries and property damage resulting from the accident caused by its customer.

However, the at-fault system has a few flaws:

  • Insurance companies take a long time to pay claims because they need to figure out who caused the accident. If insurers disagree on which driver caused the accident, they might need to allocate fault between the drivers. This takes time and may even require you to hire a personal injury lawyer to fight for your position as the victim rather than the at-fault driver.
  • Insurance premium rates go up because many auto accidents end up in court to figure out who caused the accident. Insurance lawyers charge fees, so insurers need to charge more to cover the costs of litigation.
  • Court dockets become clogged with personal injury lawsuits. This ends up costing the government money because they need to appoint more judges to handle the backlog. If they do not, their court system grinds to a halt.

As a result of the problems with an at-fault insurance system, about 12 states have adopted a no-fault insurance system. In a no-fault insurance system, each driver’s insurer pays the damages for their customer regardless of fault. In other words, every driver files a claim with their insurer and the insurer must pay the claim even if the insurer’s customer caused the accident.

This system speeds up claim processing. But it has an unintended side effect — a car accident will cost you money even if you were an innocent victim. There are two reasons for this:

  1. Since your insurer must pay your claim regardless of fault, your premium rates will go up after an accident, even if you did not cause the accident.
  2. To cap your insurer’s exposure, most no-fault states either allow the insurer to charge a deductible or cap the amount of the insurer’s liability. For example, if you have $5,000 in medical bills, you might be required to pay a $500 deductible or the insurer might only be liable for 75% of your bills, depending on your state.

In either an at-fault state or a no-fault state, you will have out-of-pocket expenses to cover at least part of your costs. It just depends on whether that money goes to pay a personal injury law firm to fight against an insurance company or a doctor to treat your injuries.

How Much Will a Car Accident Cost Me If I Caused the Accident?

If you caused the accident in either a no-fault or at-fault state, you could face exposure to substantial costs for yourself and anyone else involved in the accident. The reason is that insurance policies have policy limits. As damages begin to mount, there is a substantial risk that the damages will exceed your policy limits, and you will need to pay for any damages over the policy limits.

For example, suppose you have a $10,000 policy limit for property damage liability and a $30,000 policy limit for bodily injury liability. If you caused the accident, the other drivers can file claims against your insurance policy. In an at-fault state, your insurance policy would be the primary option. In a no-fault state, your insurance policy would be secondary after their policies.

But in either case, your insurance coverage will only cover damages up to the policy limits. If the other driver involved in the accident died, your $30,000 policy will probably not be enough to cover the damages from a wrongful death lawsuit. The deceased driver’s estate can claim unpaid medical bills, lost future earnings, and even their pain and suffering at losing their loved one. In some cases, these damages can run into the millions of dollars and your policy will only cover the first $30,000.

But even if the other driver survives the accident, your financial exposure could be substantial. An injured driver, passenger, pedestrian, or bicyclist can claim expenses for current and future medical treatment and physical therapy. They can also claim past and future lost income. These expenses could be substantial for severe injuries like back injuries or traumatic brain injuries.

How Much Will a Car Accident Cost Me Based on My Insurance Coverage?

Car accidents will often cost you money just because you lack the right types of insurance coverage. For example, if you damaged your car in a single-car accident, your insurance company will only pay for your auto repairs if you have collision coverage. Unfortunately, auto insurance policies are sometimes opaque as to what casualties they cover.

Some common coverage options for auto insurance include:

  • Personal injury protection (PIP): PIP covers your medical bills and your lost income if you are injured in an accident. Without PIP, your auto insurer will not pay your medical bills, and you will need to submit a claim to your health insurer or the insurer for an at-fault driver, if there was one. PIP covers necessary medical expenses and does not cover cosmetic procedures. For example, it will cover oral surgery to repair teeth broken in the accident, but will probably not pay a cosmetic dentist to fix a tooth gap created by the accident if it does not affect your chewing and bite.
  • Med pay: Med pay coverage is similar to PIP, but does not pay for lost income. It usually has low limits because it is usually tailored to only cover emergency medical expenses like an ambulance and emergency room care.
  • Collision: This coverage will pay to repair or replace your car when it is damaged in a collision with a moving vehicle or a stationary object. Thus, collision would pay a body shop to repair your bumper after hitting another car or backing into a light pole. Collision coverage usually requires a deductible. This means your insurance will only pay for damage that exceeds the deductible amount, and you will be responsible for any damage less than the deductible. Moreover, when the damage exceeds the deductible, the insurance company will only pay the amount over the deductible amount.
  • Comprehensive: Comprehensive pays for damage caused by anything other than a collision. Vandalism, theft, and damage caused by natural disasters are covered by comprehensive. Some insurers require you to buy comprehensive if you want collision coverage.
  • Uninsured motorist: If you are hit by a driver without auto insurance, or you are involved in a hit-and-run accident, uninsured motorist coverage will pay for your property damage and bodily injuries. Without uninsured motorist coverage, all your expenses from an accident might go unreimbursed.
  • Liability: This is what most states require. Liability insurance pays for property damage and injuries suffered by others. For example, if you slide in a parking lot in a snowstorm and damage a building’s piping systems, liability insurance will pay for repairs to the building, but not your car. Most drivers mistakenly believe their car insurance is for their protection. While liability coverage can protect you from lawsuits, it does not pay for your property damage or injuries. For that, you will need collision, PIP, med pay, or uninsured motorist coverage, depending on the accident.

How Much Will a Car Accident Cost Me If I Have Roadside Assistance?

Roadside assistance and auto club memberships can save you a substantial amount of money after a car accident.

Towing expenses can be substantial. If you have collision coverage or another driver is at fault for your accident, you might receive reimbursement for towing. Otherwise, you might need to pay for your towing expenses out of your pocket.

If you have roadside assistance, your service provider will pay for towing after an accident. These programs often have limits such as the distance you can be towed for free. But in many situations, roadside assistance or an auto club membership could save you hundreds of dollars after an accident.

How Much Will a Car Accident Cost Me If I Need to File a Lawsuit?

You can file a lawsuit against the driver who caused an accident in at-fault states and no-fault states after you exceeded your policy limits. Filing a lawsuit costs money.

Most lawyers will represent car accident victims on a contingency fee. This means that the lawyer is not paid unless you settle or win your case.

But contingency fees do not cover everything. Costs associated with your case must be reimbursed at the end of your case. If the lawyer had to hire an expert witness to testify or provide an expert opinion, the lawyer might advance the money to pay the fee. But you will be expected to repay the lawyer at the end of the case from the settlement or damage award.

Other expenses you might need to reimburse include:

  • Court filing fees
  • Court reporter fees
  • Courier fees to deliver medical records and legal documents

How Much Will a Car Accident Cost Me If I Was Driving for Work?

The situation changes slightly if you are driving for work. When you are injured on the job, your injuries are covered by workers’ compensation. This is true whether you work for roofers and fall off a roof or you work for a delivery company and suffer injuries in a car accident.

Generally speaking, workers compensation will cover all your medical bills. Your employer’s insurance should cover the damage to your vehicle if you were injured while driving your car rather than a company car. But you will see a big difference in how you are reimbursed for lost income.

If you are injured on your personal time, the at-fault driver is responsible for your past and future lost earnings. Thus, if you miss work three weeks recovering from your injuries and then miss two hours a week for physical therapy, you are entitled to reimbursement for the wages you lose during that time.

Workers’ compensation, on the other hand, caps your income benefits. You are usually only allowed to receive two-thirds of your lost income. The idea is that you will return to work as quickly as possible if you can make more money working than recovering from your injuries. But this means that you end up ‘paying’ for your car accident with the wages you cannot receive, even though you were injured on the job.

The answer to ‘how much will a car accident cost me?’ is not simple. It depends on many factors including the state you live in, the type of insurance you bought, and whether you caused the accident. You will almost certainly pay more after an accident that you caused, even if you have insurance. This is an excellent reason to drive carefully.

But even if you do not cause an accident, the answer to ‘how much will a car accident cost me?’ will include deductibles, towing expenses, court costs, medical costs for unreimbursed medical treatment and therapy, and attorney fees. Although you can hope that most of these will eventually be won back in a settlement or lawsuit, it could take time.

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