A liability claim occurs when you cause damages or injuries to a third person. Every state in the United States requires you to carry insurance. The insurance that is required by law is liability. Liability coverage is the “bear bones” coverage. If you carry an insurance policy, then you have coverage for a liability claim.
For instance, auto liability coverage will only cover someone else’s vehicle; you will have to pay for damages to your own car. If the accident was not your fault, then you have to make an auto liability claim against the person that hit you. If that person does not have insurance, then you will have to fix your own car and try to collect against that person directly. This is the reason why you need to Uninsured/Under Insured Motorist Damage.
Liability coverage is a fault base coverage. This means that for this coverage to be triggered, the driver carries the insurance liability coverage must be at fault at least partially. Here is where insurance adjuster will take their time investigating who was at fault and how much. There are cases where fault is clear (rear end accidents). However, there are other accidents where there is a clear dispute of facts (red – green light dispute). The claim adjuster must determine who is at fault. If you are in a situation where you are being accused even for 1% fault, then you want to have your own insurance carrier protect you from the auto liability claim the other insurance company will make against you.
Clear fault liability claims are not much of an issue. If you were at fault, then your insurance company will pay for all damages and injuries to either the responsible party or her insurance company. Equally, if you were not at fault, then her insurance company will pay your damages directly. You insurance company will not pay you anything since you did not have first party coverage (Collision).
A dispute auto liability claim can become quite cumbersome. If there is split fault, then your insurance company and the other carrier must “sit down” and argue liability and damages. The adjusters will attempt to reach an agreement as to the percentages of fault of each driver. If they agree, then they would pay each other the amount of their corresponding damages. If you did not carry collision, then you have to call the carrier of the other person and ask for at least that percentage of your damages. They will pay you directly. If you do carry collision, then the insurance companies will exchange payments and then your company will send you your deductible back (if your company had already paid your damages and/or medical bills).
If the adjusters cannot agree about who is at fault, then insurance companies will go to arbitration. An impartial arbitrator will review both adjusters’ files and then make a binding decision. Arbitration decisions are final and insurance companies must follow them. Insurance companies cannot appeal arbitration decisions.
You are still bound by your policy liability limits. The damages that you caused must be below those limits for the insurance company to protect you 100%. The insurance company is required by law if they believe there is a risk that the damages will exceed your limits.