Who Pays Out for a Car Accident Claim? the Driver or the Driver's Insurance Company?

October 18, 2016

Winning a settlement for your car accident claim can be such a relief that you don’t stop to ask who will pay for your damages. You might not care – as long as someone pays your settlement. Knowing who will pay out for your car accident claim in California, however, is important in deciding whether pursuing a claim is worth it. If the defendant will pay, for example, he or she may declare bankruptcy and you’ll never see your reward. An insurance company, on the other hand, will have the funds to pay out. If you’re considering pursuing a settlement for your car accident, first identify where the money will come from if you win.

Who Has Insurance?

Who will pay out your claim often depends on whether or not the defendant has car insurance. Although California requires drivers to carry minimum car insurance coverage of at least $15,000 per person, $30,000 per accident, and $5,000 for property damage, hundreds of people illegally drive around without insurance. If you happen to be in an accident with someone who doesn’t have insurance, you may turn to your own company for compensation.
You also may need to speak to your own insurance company if the other driver’s company refuses to admit that its insured person caused the accident. If you can’t provide proof of your own losses or out-of-pocket expenses, the insurance company will say that you’re not entitled to compensation. An insurance company will only give a settlement offer if you provide information and documentation proving the other party’s fault, your losses, and your expenses.
If you both have car insurance, either company may pay for damages. Knowing which company is best to pay depends on the situation. While you won’t have to pay a deductible if the other driver’s insurance company pays for repairs, you lose certain rights under your own insurance policy – such as cost-effective and quick-dispute resolutions. Other considerations include knowing if the other driver has enough insurance to adequately cover your damages.
California’s $5,000 minimum for property damage is lower than many other states that typically set the bar at $10,000. For this reason, many car accident cases in California require two insurance companies or out-of-pocket payments to cover costs.

When Will the Driver Pay?

The only situations in which the driver would pay out-of-pocket is if you keep the deal under the table or if neither one of you carries car insurance. Keeping a car accident settlement between only you and the other driver is risky, as the other driver could give you false contact information and leave. If you didn’t report the accident to police or your insurance company, the law can’t help you recover damages from the defendant who fled. Trusting a stranger to pay for your damages without involving an insurance company or an attorney is a recipe for disaster.
If the other driver doesn’t have insurance and neither do you, the at-fault driver will have to pay for damages out-of-pocket. It’s wise to contact an attorney in this situation instead of simply trusting the other driver to pay for your damages – especially if you’re coping with a personal injury from the crash. If the at-fault driver can’t afford your damages, you may have to pay for repairs out of your own pocket if neither of you carry insurance. Unfortunately, you can’t collect damages from someone who has nothing. Therefore, if an at-fault driver doesn’t carry insurance and can’t afford costs out of pocket, you may be out of luck. Always report to your insurance company and consult with an attorney following a car accident.