The short answer to this question is that the amount of available car insurance coverage is a critical component of any insurance claim or lawsuit stemming from a car accident. Read on to get an understanding of why this is true, and how things might play out in the real world.

The Key Question: Is There Coverage?

If the person who hit you doesn’t have any car insurance or only has a minimal amount of coverage, then it doesn’t matter how obvious fault for the car accident seems to be, or how serious your car accident injuries are, you probably aren’t going to get much compensation for your injuries, except it one of two possible scenarios.

• First, if you carry uninsured or underinsured motorist coverage, then you can make a claim against your own insurance company for the full amount of your damages, up to coverage limits, less any money you receive from the defendant’s insurance company. That is usually the only real alternative if the other driver doesn’t have enough insurance (and if the other driver does not have sufficient assets to make a personal injury lawsuit worthwhile). But, unfortunately, not everyone carries uninsured and/or underinsured motorist coverage, and once you've exhausted the limits of any UIM coverage you do have, you're likely out of options.
• Second, it is possible that the person who hit you has enough assets to cover your losses, including medical bills and lost income. But from a realistic standpoint, people who don’t have car insurance probably don't have a lot of extra money sitting around to pay off a court judgment.

Let’s look at an example of how the amount of available insurance can affect a car accident case. Let’s say you get hit, that the accident is definitely the other driver's fault, and you are seriously injured, to the extent that your lawyer advises you that $1,000,000 would be a very fair settlement. As long as the defendant has $1,000,000 or more of automobile insurance coverage, your case will proceed normally. Your lawyer will prepare your case, make a settlement demand, and hopefully settle the case without having to go to trial.

But let’s say your lawyer writes the defendant’s insurance adjuster to ask about available insurance coverage, and the adjuster tells your lawyer that the defendant only carries $100,000 in liability insurance. In that case, your million dollar settlement with the defendant just turned into a $100,000 settlement.

The only way that you are going to be able to get proper satisfaction for your losses is if you have a significant amount of underinsured motorist coverage. If you have $1,000,000 or more of underinsured motorist coverage, then, once again, your case will proceed normally. Your lawyer will settle with the defendant for the policy limits and then file a claim against your own insurer. You will then litigate the underinsured claim against your own insurer.

But let’s say you only have $250,000 or $500,000 in underinsured motorist coverage. In that case, once the adjuster is convinced that this is a million dollar case, your insurer might only pay you the policy limits. If that happens, then your case is over, and, unfortunately, you only recovered 25 or 50 cents on the dollar for your injuries.

So it's easy to see how the amount of available insurance coverage can play a crucial role in any car accident case. The risk of getting hit by an uninsured driver—or by a driver with only a minimal amount of coverage car insurance—is real. So it's a good idea to consider carrying a significant amount of uninsured and underinsured motorist coverage.

This is all assuming that the car accident was the other driver's fault, which of course isn't always the case. Learn more about when the car accident is your fault.