Insurance Follows the Car When you sustain injuries in an accident, you want someone to accept liability and pay your injury claim. Insurance follows the car, so the vehicle owner’s insurance company usually accepts responsibility. When a policyholder reports an accident, insurers investigate, determine liability, and pay what they owe. While this is the basic description of an insurance company claim, the process doesn’t always work out this way. Sometimes the Driver or Car Owner’s Liability Insurance Doesn’t Apply In states with compulsory bodily injury liability insurance laws, drivers and owners must insure their liability exposures. Many states require proof of financial responsibility when drivers obtain or renew their licenses or vehicle registrations. They must also show proof of coverage after an accident. When driving another’s vehicle, police officers usually accept the owner’s insurance as proof of financial responsibility. Because insurance follows the car, the owner’s insurance company typically accepts the claim. However, coverage issues still arise because: The policy is named-driver only (coverage only for a person named on the policy.) The driver didn’t have permission to use the vehicle. When a policyholder reports the incident to the police, insurers handle the claim as a theft. They deny coverage for any accidental damages caused during a theft. The policy expired or was non-renewed. The policy limit cannot fully compensate you. Some Drivers Choose Insurance Alternatives In some states, drivers prove financial responsibility by posting a bond or a cash deposit. This method usually covers the individual’s liability exposures when driving a vehicle. A deposit often requires placing a lien against real property for an individual. If a driver injures you, you only have access to the bond or deposit after receiving a judgment. Some States Don’t Require Bodily Injury Liability Insurance All states except Florida, New Hampshire, and New Jersey require bodily injury liability insurance. After certain convictions, New Hampshire requires SR22 insurance filings. New Jersey and Florida mandate Personal Injury Protection coverage (no-fault) and property damage liability coverage. Insurers must offer optional liability coverage. States usually require commercial transport companies to have liability insurance. Some Commercial Entities Pay Their Own Claims Many companies purchase liability insurance policies that pay claims for people they injure. Financial responsibility laws also accept bonds, cash deposits, and self-insurance certificates in most states. Commercial Self-Insured Retentions And Self-Insurance When large corporations self-insure or have traditional policies with high self-insured retention limits, they control or influence claim settlements. S-I-R: Some large corporations obtain liability policies with large self-insured retention limits that operate like deductibles. Commercial insurance claim departments handle and pay the claims, but policyholders ultimately pay them back. Self-Insurance: Other large corporations self-insure all of their losses. Each company operates its own claim program or pays someone else to do it. Ultimately, claim payments come from a company’s funds. Your Uninsured Motorist Insurer Might Compensate You When you sustain an injury in an accident, you can’t always depend on negligent/responsible parties having valid insurance. When no liability insurance covers your accident, your insurer considers settling your claim under Uninsured/Underinsured Motorist coverage. UM/UIM coverage is mandatory in many states but optional in others. If you have UM/UIM coverage, your insurance policy settles your injury claim if: The other person is negligent and caused your injuries but has no insurance. The driver/owner’s liability insurer is insolvent. A person hits you and leaves the scene unidentified. The negligent driver/owner doesn’t have enough insurance to pay for your injuries. If any of these circumstances apply, your insurance company handles your claim like a liability claim. They negotiate a settlement the same way the other driver/owner’s insurance carrier would have done if they’d had liability insurance.