July 21, 2017

Third Party Insurance: Is an Uninsured Driver Covered in an Accident?

This entry is part 4 of 5 in the series Ask an Adjuster Your Insurance Questions

An uninsured driver can be covered by third party insurance when an insured driver is at fault for a car accident. Third party insurance can also cover an uninsured driver when a car has defects not caused by a lack of necessary maintenance.

What is third party insurance?

When it covers you, third party insurance is someone else’s insurance. It covers you when someone else causes you injury or damages your property — if that someone else has third party insurance. Read this if you want to know more about what third party insurance covers. Third party insurance is also called liability insurance. It is mandated by law in all 50 US states, but very little is done when drivers break this law, so many drivers do not have third party insurance.

How do I know who is at fault?

Who caused the accident? That person is at fault. Misguided people sometimes say, “Whoever hit you is at fault.” This is not true. Sometimes there is a long chain of hits, such as when several stopped cars are all hit into each other by the very back car. In this situation, the very back car is at fault. Infinite situations are possible. What it boils down to is whoever caused the chain of events is at fault. Sometimes a car has defects that cause an accident. If these defects are not due to lack of proper maintenance, then the factory who made the car or a shop that failed to repair a car can be at fault for an accident. In those cases, the factory’s insurance or the shop’s insurance is the third party insurance.

How do I know if they have insurance?

If you forgot to ask the other drivers in the accident for their contact and insurance information, you can get this off the police report if one was taken. An attorney can get insurance information for you if you have a name and address or even just a license plate number.

Why have car insurance then? Four reasons:

1) Third party insurance only covers you if the accident was NOT your fault. You need auto insurance for when you cause an accident. You won’t mean to cause it. That is why it is called an accident. Planning to just never cause an accident is not practical. Get car insurance. It won’t cover you for this accident, but you need it for your next accident.

2) If you have adequate insurance, then your insurance can handle everything for you and collect from the other driver or their insurer through a process called subrogation. Much easier.

3) In California and many other states, uninsured drivers cannot receive money for “pain and suffering.”  They can only collect actual expenses from a third party’s insurance company. Each state has its own laws on this, subject to change, so check with your state’s Department of Insurance.

4) Many drivers don’t have third party insurance. If both drivers are uninsured, then both drivers have to cover their own expenses and settle liability in court. This is expensive and it takes months or even years sometimes.

Video: How To Save Money on Car Insurance

Farmers Insurance agent Amanda Nguyen says the best way to save money on car insurance is by getting a higher deductible. She says typically a higher deductible saves a family $150 per car. She also points out this saves you money on premium increases in the long run because you don’t file claims for small losses.

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