YOU ASK:

When a claimant settles with an auto insurance company does that prevent civil law suit?

WE ANSWER:

Usually, two parties (the claimant and the auto insurance company) will aim to strike a win-win situation where both are happy.

If you are the one deemed to be legally responsible and liable for the car accident and you have liability coverage, your auto insurance company will pay to settle the claimant's demands up to the maximum benefit the policy provides.

When the auto insurance company settles the claim, it will usually ensure that the claimant will not come back again, asking for more money. They will usually have the claimant sign a release of any interests the claim will have with regards to the event as it is related to the insurance company. This release and waiver signifies that the claimant has given up any claims (both known and unknown).

In most happy cases (about 90%), the settlement with the auto insurance company will be the end of the story. However, there are still instances (about 10%) that even if the claimant settles with the auto insurance company, it does not mean that the claimant will not pursue a civil lawsuit against you. This may be because the settlement that the claimant received from the insurance company is not enough to compensate for their loss.

Remember, your liability for causing personal injury is not just limited to the medical expenses incurred because of the injury. The liability will extend to the income the claimant has lost as a result of the injury as well as any expenses he or she may incur in the process of recovery or rehabilitation. You should also anticipate a claim for compensation due to the claimant's pain and suffering.

Even when the insurance company has settled for an amount, there may be future expenses that the claimant will want compensation for - and this can result in a civil law suit filed by the claimant against you.

The claimant has one year to file the lawsuit. This depends on your state local laws and statute of limitations for the property damage claim.

The possibility of a claimant turning to you since your liability insurance coverage is not enough should make you consider getting a higher liability insurance coverage. The recommendation is that you should get the amount of coverage that corresponds to your amount of assets.

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