If your car is totaled and you only have liability insurance, you will have to pay to replace the vehicle yourself or file a claim with the other driver’s insurance company. Liability coverage alone does not protect your car in any way, just injuries and damage you may cause to others. You need to have collision, comprehensive, or new car replacement coverage if you want your insurance company to pay to replace a totaled car. However, if your vehicle is damaged or totaled in an accident that isn’t your fault, you should make a claim on the at-fault party’s property damage liability policy to get your car repaired or replaced.
Only Having Liability Insurance Will Not Cover:
Damage to your vehicle from an accident.
Damage to your vehicle from fire, hail, flooding, fallen trees/limbs, or animal strikes.
Injuries you or your passengers incur.
Theft or vandalism of your vehicle.
On the other hand, collision coverage would help if you cause a run-in with another vehicle or object that totals your car. Comprehensive coverage would apply to damage caused by a fire, storm, or animal encounter, as well as if your car is stolen. Finally, new car replacement coverage would let you recover the full value of a newly purchased vehicle that gets totaled.
Third-party liability insurance is insurance that pays when the policyholder injures another person or causes damage to another person’s property. In car insurance, third-party liability insurance is required in almost every state, and it only applies when the policyholder causes an accident. Third-party liability insurance does not pay for the policyholder’s own injuries or property damage.… read full answer
The Parties in Third-Party Liability Insurance
In third-party liability insurance, the first party is the policyholder and the second party is the insurance company. The third party is anyone else who becomes involved. Since liability means legal responsibility, third-party liability refers to the policyholder’s legal responsibility to someone else.
For example, say that Driver A accidentally rear-ends Driver B at a stop-light, causing minor damage to both cars’ bumpers. Driver B can file a claim with Driver A’s third-party liability coverage to pay for the damage. However, Driver A cannot file a claim with their own third-party insurance, since they are the first-party in this scenario. Instead, Driver A would need to have collision insurance for the damage to their own car to be covered.
Types of Third-Party Liability Car Insurance
Third-party liability car insurance incorporates two subsections: bodily injury and property damage liability. In addition, car insurance policies usually include three separate payout limits to cover different aspects of third-party liability. For instance, a policy written as 25/50/25 refers to limits of $25,000 for bodily injury claims per person, $50,000 for bodily injury claims per accident, and $25,000 for property damage claims.
Third-party liability car insurance is a term most frequently used outside the United States. In the U.S., insurance companies will usually just call it liability insurance instead.
You can fight an insurance company over a totaled car’s value by sending the insurer a counteroffer along with evidence justifying your car’s value. If the insurance company does not raise its offer, you can contact your state’s insurance regulator, seek arbitration, or file a lawsuit.
After receiving a settlement offer from the insurance company:
Gather evidence, including an independent appraisal, the car’s sticker details, prices for comparable vehicles, photos of the car before the accident, and receipts for any features you added.
Send this evidence and a counteroffer to the insurance company.
If the insurance company does not negotiate to your satisfaction, contact your state’s insurance regulator to request help.
Ask your insurance company for third-party arbitration if necessary.
File a lawsuit as a last resort.
Limitations When Fighting an Insurance Company Over a Totaled Car
It’s important to remember that insurance companies are only required to pay a car’s actual cash value (ACV), not the cost of a replacement car or the original price you paid for the vehicle.
Car insurance companies and state laws determine when a car is declared a total loss, so it is unlikely that you will be able to keep your insurer from totaling the car if they deem it necessary. But you can negotiate with your insurance company if you think the amount they propose the car is worth is less than the car's ACV.
It’s in the insurance company’s interest to prevent a dispute from escalating, so sending a counteroffer directly is the best place to start. Otherwise, the cost of filing a lawsuit is usually not worth the potential rewards, but it depends on your situation.
Liability-only insurance is car insurance that pays for other people’s injuries or damage to other people’s property, but not the policyholder’s injuries or property. The term “liability-only car insurance” is used to distinguish policies with basic coverage from those with collision insurance and comprehensive coverage.
Repairs to/replacement of items in the car during an accident
Repairs to/replacement of other property, like a mailbox, fence, or house
Liability-only insurance is the least expensive car insurance since it provides such minimal coverage. However, driving with only liability insurance can lead to expensive bills for your own property or injuries.
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