How Does Car Insurance Work When You Are at Fault?


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Updated: June 28, 2024

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If you're at fault in a car accident, your insurance company should spring into action to manage the claim for the other driver's damages. This involves investigating the accident, determining the extent of the damage and negotiating a fair settlement with the other party or their insurer. However, state laws will impact at-fault findings and who will ultimately pay for damages.

Key Takeaways

Your liability insurance covers the other driver's costs if you cause an accident, but your rates may increase.

Collision coverage protects your own car after an accident, even if you're at fault.

State negligence laws determine who pays for damages and how much after a car accident.

What Being at Fault Means in a Car Accident

If you're found "at fault" after a car accident, you're legally responsible for causing it. This isn't decided randomly — police officers, insurance adjusters or courts consider factors like negligence, traffic laws and relevant evidence.

If you're at fault, your car insurance is supposed to step in and help cover the costs of the damage you caused to the other driver and their car. This is where your liability coverage comes into play. It can help pay for things like fixing or replacing the other driver’s car, medical bills or lost wages.

Sometimes, accidents aren't black and white. Both drivers might share some of the blame. This is "comparative negligence," meaning each driver is responsible for a portion of the damages.

How Car Insurance Works When You’re at Fault

How your car insurance handles an at-fault accident will depend on your location and whether your state follows an at-fault or no-fault system. Assuming you’re at fault in an accident:

Factor
At-Fault State
No-Fault State

Who Pays

Your insurance covers the other driver's damages (car repairs, medical bills, etc.)

You and the other driver use your insurance for injuries (PIP), but your insurance covers their car damage.

Your Coverage

Personal Injury Protection (PIP): Covers your medical bills and sometimes lost wages.

Even if you're at fault, you don't have to worry about your own car repairs if you have collision coverage. This optional coverage is especially useful if you have a new or valuable car. It usually kicks in after you pay your car insurance deductible.

When you are at fault in an accident, your insurance company handles the claim for the other driver's damages through your liability coverage. Here's how the process typically works:

1
Looking Into What Happened

Your insurer will investigate the details of the accident. It will review the police report, interview witnesses and gather any other information to confirm what happened and who is responsible.

2
Reaching Out to Other Parties

The car insurance adjuster will contact the other driver (and their insurance company, if they have one) to discuss the claim and determine the damages.

3
Determining Costs and Settling Up

Once fault is established, your insurer will figure out how much it'll cost to fix the other driver's car and any medical bills they have. It will then offer a settlement to cover those costs up to the limits of your policy.

4
Making Payments

If everyone agrees on the settlement, your insurance company will pay the other driver or their insurance company directly. If the costs exceed what your policy covers, you might have to pay the extra out of pocket.

How Fault Is Determined

Determining fault after a car accident isn't always a simple matter of "who hit whom." It involves a legal assessment of who was responsible for causing the collision. This could involve the police, insurance companies or even the courts if things get complicated.

Who's at fault ultimately impacts who is responsible for damages.

Each state has rules for deciding who's at fault in an accident. These are referred to as "negligence laws." Here's a quick look at the main types and states following these guidelines.

Contributory Negligence

Contributory negligence is the strictest type. Only a handful of states follow these guidelines. In these cases, if you're found even partially at fault for a car accident (even 1%), you can't recover any damages from the other driver.

States That Follow Contributory Negligence Laws

Pure Comparative Negligence

In the states that follow pure comparative negligence guidelines, you can recover damages no matter how much you were at fault for a car accident, but your award will be reduced accordingly. For example, if you're 90% at fault, you can only recover 10% of your damages.

States That Follow Pure Comparative Negligence Laws

Modified Comparative Negligence

Modified comparative negligence is the most common guideline for negligence laws. This means you can only recover damages if your fault for a car accident is below a certain threshold, usually 50% or 51%. You can't recover anything if you're at or above that threshold.

States That Follow 50% Modified Comparative Negligence Laws

States That Follow 51% Modified Comparative Negligence Laws

South Dakota follows a unique hybrid of comparative and contributory negligence known as the "slight/gross negligence comparative" guideline. This means you can only recover damages if your fault is considered "slight" compared to the other driver's "gross" negligence, making it more difficult to receive compensation.

How At-Fault Accidents Affect Rates

If you're found at fault in an accident, it's not just your car that takes a hit — your insurance rates can, too. Here's how it usually plays out:

    money2 icon

    Higher Premiums

    After an at-fault accident, your insurer might see you as a riskier driver and will likely raise your rates to cover that risk. How much your rates go up depends on a few things:

    • How bad the accident was
    • The amount of damage and injuries
    • Your driving history
    • Your state's laws and your insurer's policies
    discount icon

    Lost Discounts

    If you previously had a good driving record, you might have been getting car insurance discounts on your rates. An at-fault accident can make you lose those.

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    Surcharges

    Sometimes, after an at-fault accident, your insurer might add extra fees to your premium in addition to the rate increase.

Typically, an at-fault accident stays on your driving record for three to five years. During that time, you'll likely be paying higher rates.

FAQ About Car Insurance and At-Fault Accidents

Accidents happen, and it's natural to have questions about how your insurance works if you're responsible. Here are answers to some common questions you might have about the process.

Does car insurance pay out if it’s your fault?
Does your insurance go up after a claim that is not your fault?
What happens when someone makes a claim on your insurance?

About Mark Fitzpatrick


Mark Fitzpatrick headshot

Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.


sources
  • South Dakota Legislature Legislative Research Council. "Codified Laws." Accessed June 28, 2024.