Sometimes, after a person has been involved in a car accident, particularly one in which he was at fault, he will be the object of a lawsuit by people who have been injured or had their property damaged. While the person's insurance should cover a person up to a certain amount of damages, the person will have to pay out of pocket for additional damages and will likely see a hike in premiums.
Car Insurance
Basic liability auto insurance provides an individual with financial compensation in the event they are liable for damages caused through their driving. Each policy will have a coverage limit -- a maximum amount of money that the auto insurance company will pay out in claims for a single incident. If the person is found liable for more than that, the insurance policy will not cover this difference.
Lawsuits
Often, claims made against a person for damages related to a car accident will be settled out of court. In such a case, the insurance company will agree to pay the individual a certain amount of money as compensation, and the person will in turn agree not to sue. However, a person may instead choose to file suit against the person in court. In such a case, the insurance company will defend their client in court.
Coverage
After the case has been heard in court, the judge will issue a ruling on who is responsible for the damages and how much the person owes. If the policy holder is found liable for damages, then the insurance company will cover the amount of the damages up the limit specified in the person's insurance policy. The policyholder will not generally be charged for his or the other person's legal fees.
Premiums
After a person has been found liable for an accident, he will generally see a rise in his premiums. Generally, the more expensive the claim filed against the person's policy, the more his premium will rise. However, being sued will not in and of itself cause a person's premiums to rise. And, if he is not found liable for the damages in the case, he may face no hike at all.
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