Car insurance is a lot like the combustion engine in your vehicle. Everyone who drives needs it, but very few people really understand how it works. That lack of knowledge leaves you in a vulnerable position when you need to file a claim to recoup losses related to a motor vehicle collision.
You could wind up in a crash that produces substantial injuries and expensive property damage only to discover that your insurance doesn’t offer the coverage you think it does. The better you understand the structure of North Carolina motor vehicle liability insurance and its requirements, the easier it will be to make smart decisions about your insurance and any claims you need to file in the future.
Your policy protects against liability, not losses
The most common misconception regarding motor vehicle insurance is that people seem to expect that their insurance policy will cover them anytime a situation involving their vehicle results in financial losses.
For example, if a driver gets rear-ended by someone else who was drunk at the time of the crash, the person whose car got smashed will likely assume that their insurance will cover the costs to repair their vehicle and any medical expenses they incur. However, that is not how liability insurance works.
Your motor vehicle insurance policy protects you against liability if you cause a crash or at least contribute to it with a mistake. If the other driver is solely responsible for the collision, it is their policy, not yours, that will pay for your medical costs and property damage.
What happens if the other driver doesn’t have insurance?
The obvious issue with carrying insurance that protects you from liability but not expenses is that your protection is dependent on the actions of someone over whom you have no control. The person who causes your crash could have a lapsed insurance policy that won’t cover you at all. They could also have the very minimum amount of coverage allowed under North Carolina law.
A person only needs to carry $25,000 worth of property damage coverage and $30,000 in bodily injury coverage for one person, as well as $60,000 total bodily injury coverage for two or more people hurt in a single crash. Uninsured drivers leave you with all of the financial responsibilities, while underinsured drivers can leave you with thousands in uncovered expenses.
When a driver does not have enough insurance to cover the damage they cause in a crash, the other driver will need to find other ways to cover those costs. Thankfully, you can add riders and extra protections to your policies that will cover you in the event that you get hurt or suffer serious property damage in a collision caused by another driver without insurance or without enough insurance to cover all of your costs.