Question: What happens if you are in a car accident that’s your fault, and the property damage exceeds your limits? Are you really left responsible for the rest?
Answer: Yes, if your car insurance liability limits are exceeded, due to the damages you caused in an auto accident, you can indeed be held personally responsible for expenses that are not covered.
Your car insurance company will pay up to the limits that you bought and not a penny more. That is why it’s always recommended that you buy higher limits that what your state mandates, if you are financially able.
State-required minimum bodily injury liability and property damage liability limits are typically low. If you are in a severe accident, or hit something rather expensive or are responsible for damage to multiple cars, then it’s very likely that your liability limits won’t be enough to cover all the damages, leaving you personally responsible. (See Expensive car, cheap insurance.")
The industry recommendation for property damage liability is at least $50,000 and even higher coverage of up to $100,000 if offered and you can afford it.
For bodily injury liability, $100,000 per person and $300,000 per incident (written as 100/300) is recommended since medical costs can add up quickly. If your limits are exceeded, you could be personally responsible for hundreds of thousands of dollars if you only carry low limits.
You will be notified if your policy limits are exceeded and need to take action to pay for the remaining expenses.
As the at-fault party, it’s your responsibility to see that the person damaged isn’t left paying for your negligence. If you don’t voluntarily pay for the expenses above your limit amount, then the person can take you to court to get a judgment against you for these costs.
If you fail to pay the person after they receive a judgment against you, they can put a lien against you and your assets. In some states, the person can also request that your driver’s license be suspended. If that were to happen, you would need to pay the judgment in full or set up a payment plan, so you could get your license back.