What To Do When The At-Fault Driver Is Underinsured

There are few things more aggravating in life than getting into an accident with an at-fault driver only to find they’re uninsured or underinsured. When they are uninsured, your best bet is filing a claim with your insurance company and possibly going after the delinquent party in court. Underinsured drivers, however, are a different breed.

When someone is underinsured, they meet the legal limits for insurance, but they certainly aren’t going above and beyond the call of duty. In other words, don’t expect them to carry more coverage than required. And in states where the coverage minimum is just $5,000, they can be adhering to legal limits while not having enough coverage to fix your car should they cause an accident.

This very situation recently arose with a Reddit commenter’s girlfriend. The story in his words:

“…someone reversed into the side of my girlfriends car. They left a note and said they had insurance and talked over the phone and swapped all the details. As it turns out the neighbor who hit my girlfriend’s car had ‘limited liability’ insurance.

“The neighbor’s insurance company stated to my girlfriend over the phone that the neighbor was only insured for $5,000 damage, and the damage to my girlfriend’s car was more than this (it caved in the door and partly damaged the frame). They have said that she is better off claiming through HER company and that they will pay the excess.

“This sounds all kinds of dodgy — is this a thing? I am not from the U.S. so am having a little trouble understanding that this could actually be a legitimate, legal thing.”


But thanks to the girlfriend’s insurance, she should still be able to come out of this okay. In the interests of expediency, what the neighbor’s insurance company said is probably the best approach, though it’s certainly far from perfect. The girlfriend’s insurance company would file the claim, handle the costs, and then recoup said claim up to $5,000 out of the other insurance company. Ideally this would remove the accident from the claims history or, worst case scenario, result in a smaller claim.

The other option would almost certainly mean a win for the girlfriend, but it would be questionable as to whether it was worth the time and court costs. That option would be filing the claim with the neighbor’s insurance company and then going after the neighbor in court for the rest. Before taking this option, the girlfriend would have to ask herself whether the battle was worth fighting.

After all, if a motorist makes the financially irresponsible decision of being underinsured, chances aren’t very good that they would have the money to pay a court judgment. It would take quite a while for the girlfriend to ever see that money, and she would incur more costs filing her case. It would likely result in more stress as well as loss of wages for the court date. In the meantime, the car would need to be fixed, so she would have to spring for whatever the neighbor’s limited liability policy didn’t cover.

Would she win? Certainly. But at what cost?


In Summary

Limited liability insurance policies can result in a lot of underinsured motorists. If one of them hits you, it’s better than if they’re uninsured but it still makes your situation more difficult. By allowing your insurance company to act on your behalf, you will save yourself a lot of time and frustration. Your car will be fixed faster, and you won’t have to deal with a costly court case down the road. Life doesn’t always go as planned, but when it veers off-course, it’s nice having a company that will guide you through the complexities.

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