What happens if someone is in an accident which is their fault?

"State laws require that all drivers must carry liability insurance in order to operate their vehicles," says Clark Jackson, President and CEO of Jackson and Jackson Insurance Agents and Brokers in Glendora, California. "In the case of an accident in which you are the party at fault, your liability coverages will pay for the amount of injury and damage that is caused to the other party. As for the losses you have incurred yourself, you can only look to your own policy to recover your damages subject to the amount of your deductibles and the specified policy limitations. The larger your deductible, the lower your premium will be but keep in mind that it also has to be an affordable sum. Don't, for instance, rush out and purchase a $1,000 deductible if you don't think you'll be able to reach into your back pocket and give it to the body shop at the time the repairs to your vehicle are being made."

At fault accidents are also "chargeable" against your driving record. "Essentially,' Jackson explains, "this means that accidents translate to black marks (demerits) that will significantly impact your insurance premium on the next renewal of your policy. The more accidents you have, the more your renewal premium will increase (a lot!)." This could also cause you to lose your "Good Driver Discount".

Accidents will remain on your driving record and, depending on the rules of your particular state, this could equate to a number of years. "It's also important to remember," he says, "that more than just accidents can be posted on your driving record. In some states, traffic infractions - have you checked that glove box lately for overdue tickets? - and more serious offenses and accidents are assigned what are called "points". If you have accrued too many points, you can even run the risk of a suspension of your driver's license." The majority of chargeable offenses will stay on your driving record for three years. During that period of time, automobile insurance will be more expensive. In states that offer a mandatory good driver discount, your renewal premium will likely increase significantly.

Given the daunting - and often expensive - consequences of properly filing an insurance claim, there may be a temptation on the part of drivers to simply deal directly with the other party and to settle things out of pocket, especially if there was no police report taken at the time of the incident and the overall damage seems relatively minor. "This, however, is a perilous exercise," Jackson warns. "Horror stories abound in the insurance industry about how under-the-table arrangements that start out amicably enough have soon turned to the functional equivalent of blackmail, especially if the other party "discovers" they have injuries that they can't afford to pay for by themselves."

The bottom line is that there is no guarantee that you will be able to work something out with the other party and you may well wind up having to file a claim anyway long after the accident has occurred. "This could affect your coverage on your insurance policy," he points out, "and could even subject you to a lawsuit for which you might not have adequate insurance protection."