Car insurance is one of those products that most individuals have, and too few individuals really understand. In fact, you may think about your car insurance only when you receive a notification that it is time to pay your premium or your insurer sends a new proof of insurance card.
However, not having car accident insurance – or not having enough insurance – can end up costing you dearly in the event of a car crash.
What Are the Basic Provisions of Auto Insurance Policies?
Alabama’s Mandatory Liability Insurance (MLI) law requires motorists to carry the following minimum insurance:
- $25,000 in the event of a death or bodily injury to one person
- $50,000 for the death or bodily injury of two or more people
- $25,000 for damaged or destroyed property
Many Huntsville drivers have auto insurance policies that exceed the minimum requirements. The Alabama Department of Insurance lists the following types of coverage that you may have as part of your insurance contract:
- Bodily injury – Covers injuries you cause to someone else
- Personal injury protection – Covers injuries you and your passengers sustain
- Property damage – Covers damage or destruction of property you cause
- Collision – Covers damage to your car that occurs as a result of colliding with another car
- Comprehensive – Covers damage or theft caused by something other than a collision with another car
- Uninsured/underinsured motorist – Covers injuries and losses you sustain as a result of a collision with an underinsured, uninsured, or hit-and-run driver
If you are unsure about the limits of your insurance coverage, contact your insurance carrier or agent.
Optional Auto Insurance Coverage
While liability coverage is mandatory, several other types of coverage are optional but worth considering.
Alabama does not require you to purchase collision, comprehensive, and UM/UIM coverage, but they can offer significant financial protection in situations where basic liability coverage does not apply.
Optional coverage, such as collision, medical payments, and comprehensive, can help pay for your own vehicle repairs, medical bills, and losses caused by uninsured drivers or severe weather.
Even if you are a careful driver, extra protection may offer peace of mind and prevent you from having to manage major out-of-pocket expenses after an unexpected accident, especially if your vehicle is newer or financed.
Alabama’s Minimum Car Insurance Requirements
Every Alabama driver must carry liability insurance that meets the state’s 25/50/25 minimum limits: at least $25,000 in bodily injury coverage per person, $50,000 per accident for all injuries, and $25,000 for property damage.
The state established the minimum insurance requirements to ensure that drivers who cause crashes have coverage to help pay for other motorists’ injuries and property damage, rather than leaving victims to shoulder the full cost on their own. However, state insurance minimums can be low compared to the actual costs of serious crashes. Many drivers choose higher limits to better protect their assets and reduce their financial risk after a collision.
Alabama also has a relatively high rate of uninsured motorists. According to the Insurance Information Institute, roughly 17 percent of Alabama drivers lack insurance coverage. That reality makes it even more important for drivers to consider paying for additional coverage to protect them in case of a crash caused by an uninsured motorist.
What Is Meant by the Term ‘Coverage’?
When you submit a car accident claim to your insurer, your insurance company will check to verify that you have coverage. That means before paying your claim (or the claim of a person you injured in a crash), the insurance company will check the details of your policy and determine if the company agreed to pay a claim resulting from the type of accident that caused your loss. If the incident and loss are covered, your insurance company is contractually obligated to pay up to the claim limit agreed to in the insurance contract.
How Liability Insurance Works After a Crash
After a crash, the liability insurance of the at-fault driver covers the other parties’ injuries and property damage. The process starts with reporting the incident and ends when the insurer pays out, but there are several other steps to complete in between.
Here is how a typical liability claim works:
- Report the accident as soon as possible, even if the damage seems minor.
- Provide details such as the police report, contact info for the other driver, and any available witness statements or photos, but do not discuss or speculate on fault.
- The insurer investigates the crash, determines who it believes was at fault, and assesses the scope of insurance coverage.
- Insurance adjusters calculate the value of injuries, property damage, and other losses.
- Your attorney negotiates with the other party’s insurer.
- The at-fault party’s insurer pays the injured party up to the policy limits.
- If a settlement is not possible, the case may go to trial, and the court will determine liability and the extent of losses.
What Does Your Policy Actually Pay For?
What your insurer will pay after a crash depends on the type and amount of coverage you purchased, as well as the specific losses involved. Policy limits, exclusions, and deductibles all affect the final payout.
Generally speaking, depending on your coverage, your policy may help pay for:
- Medical expenses for injured drivers and passengers
- Lost income due to injuries
- Pain and suffering
- Vehicle repair or replacement costs
- Damage to other people’s property
- Rental car expenses
- Towing and storage fees
- Damage caused by theft, fire, or weather
- Injuries caused by uninsured or hit-and-run drivers
What if My Insurance Coverage Is Not Enough for My Expenses?
If the at-fault driver has only a $25,000 bodily injury policy and they cause injuries to you that exceed this amount, you may be able to recover the difference if your own auto insurance coverage includes uninsured and underinsured motorists. You may be entitled to bring a legal claim against the at-fault driver if you have losses that exceed the amount paid by the insurance. If your insurance company has paid any amount of compensation to you, your insurance company may try to seek compensation from this person for the amounts they paid to you.
The Huntsville auto accident attorneys at Morris, King & Hodge, P.C., are dedicated to assisting injured motorists as they pursue the compensation they need from the at-fault driver and their insurance company.
Contact us right away after a car accident so we can go to work for you. You can reach our office by phone or by contacting us through our website.
