How does settlement works?

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: Dec 30, 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 Brooklyn, NY

Asked on 12/30/2011

How does settlement works? Example: I am involved in a serious accident my insurance liability limit is 50K,however i caused damage worth $500K and my insurance company knows that damage is serious. What happens next? Does my insurance company give the victim 50K,and I am left responsible for everything else,including defending the lawsuit? If my insurance company manages to settle for 50K with victim,the victim will NOT be able to sue me for more? Or My insurance company goes to trial, pays for their own lawyers, etc.. and then pays out the 50K of the judgement awarded to the victim,and I have to cover the rest.

Answer given on December 30, 2011

If you are involved in an auto accident, and it is your fault, the insurance company will pay for damages and injuries up to the limit in the policy. They will pay to defend you if the case goes to trial, and usually that amount is not a part of your liability insurance. Then, if the case results in a settlement over your liability limits, then you would be responsible for the additional amount owed to the other party.If you have assets that can be attached, the other party may do so. If you do not have any assets, or they are insufficient to pay the balance, a settlement or lien can be filed against you for future earnings until the amount owed is paid. This could work out differently if you are in a no-fault state. You should contact your agent or broker who can explain how the insurance works for no-fault.

IMPORTANT NOTICE: These answers are for general information purposes only and are provided by the person answering and AS IS. It has not necessarily been reviewed by the management staff of 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 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 to represent you.

Free Insurance Quote Comparison

Enter your ZIP code below to compare cheap insurance rates.

 Secured with SHA-256 Encryption