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?

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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...

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UPDATED: Feb 5, 2011

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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.


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