How does settlement works?
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UPDATED: Dec 30, 2011
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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.
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