Why Insurance is the #1 Factor in Your Car Accident Insurance Claim Settlement

We received a call the other day from a potential client; we'll call him Mike. Mike had been seriously injured in a car accident. He broke his leg and he needed to have surgery to repair it. Mike will need significant medical treatment to recover from his injury. His medical bills are likely to exceed $75,000. The other driver was 100% at fault for the accident. By all accounts, Mike should should be entitled to a substantial settlement from the other driver's insurance company.

Unfortunately, the other driver only had $20,000 in insurance coverage, the minimum amount required in his state. This is obviously not enough to fully compensate Mike. So what can Mike do? There are 3 options Mike has going forward:

  1. Go after the at fault driver personally. There's nothing that precludes Mike from filing a lawsuit and getting a judgment against the other driver for the full amount of his losses. The problem is that it is highly unlikely that a driver with only $20,000 in insurance coverage has any substantial assets to collect. So Mike will be stuck with a large judgment on paper, but in the end will only be able to collect $20,000 - the amount of the insurance coverage. Getting a judgment would require a lot of work and offer no reward outside the $20,000 in insurance coverage.

  2. Hire a lawyer. Typically lawyers will not go after judgments unless there is a good chance they will be collectible. So if Mike hires a lawyer to take his case, the lawyer will probably collect the $20,000 and call it a day. The problem is that after attorneys fees of 1/3, Mike is left with just $13,333 before paying for any of his medical expenses! It never hurts to talk to an attorney, just make sure the attorney is not taking 1/3 of your settlement for a 2 minute phone call you could have made on your own.

  3. Settle the case on his own. If Mike demands settlement of the full amount of the insurance policy, $20,000, the insurance company will likely pay it ASAP. We suggested Mike use the free demand letter eCarCrash.com automatically generates when you sign up. This way, Mike does not have to hire a lawyer and can keep 100% of the settlement (minus any medical expenses he needs to pay). This is by far Mike's best option and it's what we suggested he do. Mike didn't need a lawyer to take away 1/3 of his settlement when he can easily collect it himself.

Conclusion: While most people are rightfully concerned with the details of how their accident happened and their injuries, few pay attention to the amount of insurance coverage the at fault driver has. By spending some time figuring out the amount of insurance coverage (just ask the other driver's insurance company), you can save yourself a lot of time and money in handling your car accident claim.