QuestionI was found to be at-fault in what I originally believed to be a fairly minor accident. However, the other side is claiming complete loss of their vehicle at about $30k, in addition to four injuries (amount unknown thus far). My problem is that I have have had the same insurance policy since I was in college, which only had $5k in liability insurance and limits of $15k/$30k for medical expenses in the state of California. I am now 35 years old and make about $70k.
The other party is going to come after me for damages in excess of my policy limits. I am not going to be able to pay these damages, as I have virtually no assets. I do not own a home, have a small savings account, a car valued at about $8k, and maybe 15K in credit card credit. Nevertheless, I do not want to go into bankruptcy and am afraid of going to lawsuit because of the expense and likely outcome that I will lose the case and face a judgement or garnished wages.
I have been told that I should demand my insurance company to settle my claim at policy limits, and allow for underinsured motorist coverage to cover the rest. In this case, I would also be given full release from future claims because in order to collect, the insurance company would have to agree to dropping all further actions against me.
Do you think that this is a good strategy based on my income and assets or do you think an insurance company would rather take their chances in a lawsuit against me given the fact that I don't have much and I could also go to BK as a final option to avoid complete personal ruin?
I can't believe I have let such a silly mistake potentially ruin my good credit and my finances. Word to the wise, make sure you have enough insurance! I could have easily afforded the higher premiums and would never have gotten into this mess.
AnswerHi Ray,
The insurance comapny of the party you hit will not accept a settlement of $5000 against a $30000 claim. Same will hold for the injury claims. The insurance company of the not at fault party will seek payment for the balance directly from you. They will likely give you an opportunity to make a monthly payment arrangement. If you are unwilling or unable to make a payment arrangement they will file suit to get a judgement. If that happens they may be able to garnish wages. All this will likely take some time to occur. In the mean time you could try to pile up some cash to try to make a settlement offer for less than what is owed. If that is not possible then a Bk may be called for.
I hope this helps
Richard Hixenbaugh
