What sources of compensation can be pursued after an auto accident?

 

A: The answer to this question depends on your specific state laws and the circumstances surrounding the accident. Typical sources of compensation for damages sustained in an auto accident include:

"Out-of Pocket" - When the damages sustained are minor and cause no real financial setback, paying for the loss "out-of-pocket" should be considered. There is no third party getting involved when you pay for your loss yourself, no continuing investigation, no actual change in your insurance, and generally less "hassle" overall. When your losses exceed what you can comfortably handle from your current resources, other sources of compensation must be explored.

Your Auto Insurance Company - Whether your insurance will compensate you for your loss depends on your contract with your insurance company. In many insurance contracts, there is both first party (you and your auto) and third party (passengers, other motorists and their property) considerations. Some contracts have medical coverage for personal injury of the insured (you) and your passengers in the vehicle. Your insurance contract may provide for collision damage repair and possibly for a car rental while yours is being fixed. Before making a claim (which is different than providing a report) with an insurance company, many people consider whether it will be less expensive for them to pay for the loss "out-of-pocket" before relying on the insurance since the actual loss under the insurance contract could result in an increase in your insurance premium in the future. The potential of an increase in your insurance premium must be balanced against your ability to pay "out-of-pocket", (including any deductible under the insurance contract). The smaller the damages, the more likely you will pay out-of -pocket; the larger the loss, the more likely you are to seek recovery from your insurance company.

Your Health Insurance Provider or HMO - You may have private health insurance or belong to a Health Maintenance Organization (HMO). In the event of a personal injury sustained in an auto accident, you could ask your own health insurer to pay for medical treatment. Sometimes, private health insurance plans or HMOs require you to seek recovery from your auto insurance company (as a primary carrier of the risk) before it will pay/provide for your medical treatment.

Other People Involved In the Accident - In addition the three sources above, you may be able to seek recovery from the other people who were involved in the accident. Your ability to recover from a third party, such as another driver, may be limited by the laws of the state in which the accident occurred. States can either have a "no-fault" law, which leaves those involved in an accident to provide for their own compensation, or a "fault" law, where the law generally makes the party who is "at fault" or "caused" the accident to occur to pay for all the damages incurred. If you are "at-fault" for an accident that occurred in a "fault" state, contact your insurance company (if you are sued, you will tender the defense and possible settlement of the lawsuit to your insurance company).

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