What a Car Insurance Policy Covers After an Accident

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UPDATED: Jul 16, 2021

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Written By: Jeffrey JohnsonUPDATED: Jul 16, 2021Fact Checked

A car insurance policy is a legally binding contract between an auto insurance company and the person who buys it. In exchange for regular premium payments, the auto insurance company agrees to cover the cost of the policy holder’s car accident. If the damage from a car accidentt meets all of the requirements described by the terms of the car insurance policy, the company pays for the car repairs and medical bills. If you have been in a car accident, you should understand how car insurance policies work so you can prepare to file your claim and get the insurance money you deserve.

What Does Car Insurance Cover?

There are several coverage parts that are included in a car insurance policy that can help with damage or injury:

  • Car accident bodily injury liability – This coverage pays medical costs for all bodily injury that the policy holder causes in an accident
  • Car accident property damage liability – This coverage pays for any and all property damage a policy holder causes in an accident
  • Medical payments – Medical payments pays for all medical bills for injury to the policy holder regardless of fault.
  • Collision Coverage – This pays for damage sustained to the policy holder’s vehicle caused by a collision.
  • Comprehensive coverage – This coverage pays for all other damage not caused by collision—theft, vandalism, fire, hail, storm damage, hitting an animal, etc.
  • Uninsured Motorist/Underinsured Motorist – This coverage pays in the event that a negligent driver is underinsured or uninsured or causes damage in a hit and run.

If you are sued based on operation of your vehicle, your car insurance policy pays for the cost of your defense in a lawsuit as well. Defending a lawsuit in court can be very expensive, even if ultimately you are found not to be legally responsible for any damages. Having this coverage included in your car insurance policy is invaluable to any driver.

All coverage in a car insurance policy is subject to dollar limits and deductible payments. Make sure you know how much the car insurance policy will pay, and how high the deductible payment is.

State Required Minimum Liability Coverage

States require all drivers to have a car insurance policy with minimum liability coverage limits. The liability coverage limits in your policy will be listed as follows: 20/40/10 (numbers change depending on the policy). The first number represents how much the policy will pay for bodily injury you cause one person ($20,000 in this example), the second represents how much bodily injury will pay if multiple people are injured ($40,000), and the third represents how much the policy will pay for property damage you cause ($10,000). You can always get more coverage than the minimum, so review the coverage limits to get a policy that you are comfortable with!

How to Use a Car Insurance Policy If You are Hurt in an Accident

Knowing what the car insurance covers is the first step in navigating any car accident claim. After a car accident, consult your policy and find out what is covered before you file the claim. Read your policy carefully, then assess the value of the covered damages and submit the claim for processing.

If you have been injured or suffered damage in an accident, and it is the other driver’s fault, then their policy should cover the costs of your injury and property damage. You, or your insurance company, will need to call the other driver’s insurance as soon as possible to report the car accident to make sure the proper claim is filed–especially if it involves injury.

As you work with the other driver’s insurance company, make sure you quickly find out what their policy will cover and whether or not your damage or injuries will be fully paid for. If the accident or injury was serious enough to exceeds the car insurance policy limits, contact a car accident attorney immediately. If the other driver’s policy is not adequate, you could have to pay significant costs of the car accident out of your pocket. An injury attorney would know how best to preserve your rights and can fight to get you the car accident settlement you deserve. Most consultations with personal injury attorneys are free, so get one involved as soon as possible.

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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.

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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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

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