If you’ve been in a car accident and you’re pursuing legal action against the other driver, one of the first things your lawyer will want to look at is your automobile insurance policy. You may be eligible for an insurance claim for your accident injuries, but there are a number of things that could impact the settlement you receive.

Any driver should take the time to read their auto insurance policy and understand what it covers—and what would and wouldn’t be paid for in the event of an accident. In today’s highly competitive auto insurance industry, consumers are constantly hearing that company ABC can save them more than company XYZ. But what are you giving up for that savings?

Insurance Coverage, Line by Line

There are several components of auto insurance coverage:

  1. Bodily Injury Liability – Pays for costs associated with injuries that the driver/policyholder causes to another when driving their own car or another person’s car (with permission).
  2. Personal Injury Protection (PIP) – Covers medical expenses and lost wages of the driver and passengers in the policyholder’s car, regardless of who is at fault.
  3. Collision – Pays for damage to the policyholder’s vehicle if an accident involves another vehicle or even an object (e.g. potholes), regardless of whether the damage was the policyholder’s fault or not.
  4. Comprehensive – Reimburses a policyholder for loss due to theft or damage caused by hail, a falling object, flood, vandalism, contact with animals like deer, or other similar situations (not caused by a collision with another car or object).
  5. Uninsured/Underinsured Motorist Coverage – Pays for damage to a policyholder’s vehicle when they are in an accident and the other driver is at fault but does not hold insurance (or insurance with limits that are too low to cover the policyholder’s vehicle damage).

Obviously if you’re ever involved in an accident, you hope that your insurance will take care of you, but it isn’t always that simple. Here are a few things to think about—and factors we look at when evaluating our clients for pre-settlement funding:

Low Bodily Injury Liability coverage might not protect your assets. If you get sued, a low level of liability coverage (e.g. $10,000 per person or $20,000 per accident) might not cover much. When selecting your policy, think about what might happen if someone were to sue you for a high amount of money. The liability coverage you choose should protect your assets.

Low PIP coverage + a serious injury = financial hardship! A common way that insurance companies try to save clients a few dollars a month is by lowering the amount of personal injury protection from something like $250,000 to $15,000 per person per accident. But if you’re ever in an accident that renders you unable to work due to injuries, $15,000 won’t go very far—especially if it takes you months or years to heal.

Selecting your health insurer for PIP might come back to haunt you. Another way auto insurance companies keep premiums low is to have the policyholder designate their health coverage provider as the primary source of medical care in the event of an accident. However, there are many reasons this is extremely risky and could end up costing you thousands of dollars if you ever were injured. Keep in mind…

  • PIP coverage by the auto insurance provider covers more than just medical bills (i.e. dental bills and funeral bills).
  • PIP coverage pays for lost wages, which health insurance does not.
  • PIP has no deductible and pays benefits until the policy limit is reached.
  • Health insurance deductibles and copays still apply! So, if you have a $1,000 deductible per year and a 20% co-pay for the first $10,000 in treatment, and your injuries last over several years, you’ll be paying thousands—every year.
  • Health insurance will cover your expenses but not those of a passenger, whereas PIP would pay both.
  • Some health insurers require individuals to reimburse them for any treatment costs once the individual receives a winning jury verdict and settlement.

There are many considerations when evaluating limits on your auto insurance policy, and the amount of coverage that is required varies by state. While it’s tempting to save on monthly premiums by choosing low limits, doing so could put you in a bad position in the long run.

How does your auto insurance policy impact the amount of lawsuit advance you receive?

If you’re awaiting settlement from a car accident lawsuit, your insurance limits factor into the amount that we are able to fund you. So, the better your coverage, the more we can advance.

To know for certain, call us. We’re in the business of helping clients protect themselves should the unthinkable happen. If you’ve already been in an accident and are in the middle of a lawsuit, but want to understand how advance funding works, let’s discuss your case and your options. Call us at 1-855-LAW-ADVANCE.