If ins payout exceeds policy limit, and i have nothing to my name, do i need to file bankruptcy or take out loans to pay the other party?

Free Insurance Quote Comparison

 Secured with SHA-256 Encryption

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Full Bio →

Written by

UPDATED: Feb 5, 2011

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Insurance Question from Poway, CA

Asked on 02/05/2011

If ins payout exceeds policy limit, and i have nothing to my name, do i need to file bankruptcy or take out loans to pay the other party? Small car turning left onto coming traffic into a gas station. Red light directly in front of the oncoming traffic, and cars were coming to a stop. One lane of cars yielded to enable passage to turn into the gas station. As I turned into the gas station, a motorcyclist came through the other lane crashed into me unable to stop in time. If my ins payout claim exceeds my policy limit and im a student with nothing to my name, do I need to file bankruptcy to pay for excess coverage/damage frm the other party?

Answer given on February 05, 2011

It appears you were determined to be at fault in the accident since you were turning left.  However, you need to work with the adjuster to see if there are any witnesses who can verify that the light was red and that the motorcyclist did not yield. 

If that does not work out and you are totally at fault, you should probably consult with an attorney as to your best course of action.  The motorcyclist could have “underinsured motorist” coverage which would help pay for the damages and injuries that exceed your limits.  However, just because you do not have any assets at this time, you could be held liable based on possible future earnings and would be responsible to reimburse either the motorcyclist or his insurance company.  Filing bankruptcy will not necessarily absolve you of this debt, but again check with an attorney.

IMPORTANT NOTICE: These answers are for general information purposes only and are provided by the person answering and FreeAdvice.com AS IS. It has not necessarily been reviewed by the management staff of FreeAdvice.com nor is it binding any insurance agent, broker, or other insurance professional or any attorney or insurance company. Insurance laws, regulations and practices vary from state to state and insurance policies and practices differ from company to company, by type of policy, by state and locality and by type of insurance. Tiny variations in the facts, policy language or a detail not set forth in a question often can change the outcome or a professional's conclusion. Although FreeAdvice.com has confirmed that the answer(s) was/were provided for the account of an experienced insurance professional, that professional may not be licensed in the state referred to in the question, and may not be experienced or up to date in the subject area. Unlike the answers provided here, upon which you should NOT rely, for personal advice you can rely upon we suggest you consult a licensed insurance professional in your area or retain a licensed attorney listed on AttorneyPages.com to represent you.

Free Insurance Quote Comparison

Enter your ZIP code below to compare cheap insurance rates.

 Secured with SHA-256 Encryption