Q: What happens when the person at fault for an accident doesn’t have enough insurance?
Apr 29, 2021

I have a liability-only policy. Another driver hit my car and one other car in an accident and both are totaled. The guy that is at fault for the accident only had $5,000 in property damage coverage. His insurance company is waiting for the total damage from the other person in the claim. They won't pay until I sign a release.

Answer provided by
Shannon Martin
Shannon is an expert in personal lines liability insurance with 13 + years of insurance industry experience. She also served as a special insurance liaison to AARP members for 6 of those years. She is a graduate of UL Lafayette and currently resides in NY with her family. Shannon is also an amateur juggler, ukulele player, and is a time travel paradox theory enthusiast.

“Unfortunately, the total of the other not-at-fault person’s damages are going to impact how much the insurance company is going to offer you to settle the claim.

They pay the damages on a pro-rata basis from the property damage liability coverage on the at-fault person’s policy.

That means, if your damages total $5,000 and the other not-at-fault person has $10,000 in damage, the insurance offer would be $1666.67 for you and $3333.33 for the other party (your damage/total damage x PD limit).

When you sign the release, you are giving up your right to pursue the other party or their insurance for the rest of the damage in exchange for the payment being offered.

If you refuse to sign the release, you can pursue the other party directly for the damages, but you cannot sue the insurance company because they are only obligated to pay up to the policy limits. “

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