Why Lack of Auto Insurance Can Hurt a Third Party Claim

20 March 2020
 Categories: , Blog

Driving without auto insurance coverage can affect your auto accident recovery. The damage might occur even if you are not the one at fault. Below are the two main ways your lack of insurance can hurt your auto accident case.

No Pay, No Play

Some states have laws that require auto accident victims to have proof of auto insurance coverage. Many people refer to such laws as "No Pay, No Play" rules. The rationale is that auto insurance works best if everyone plays by the same rules. Proponents of these laws argue that the insurance industry would suffer if only a few people pay premiums, but anyone can collect damages.

States with "No Pay, No Play" will allow you to collect economic damages, but not non-economic damages, if you don't have auto insurance. Economic damages are material or tangible losses, such as medical bills and car repair costs. Non-economic damages are intangible losses such as pain and suffering.

Each state applies "No Pay, No Play" rules differently. For example, some states will allow you to collect non-economic damages if the other party was intoxicated or committing a felony at the time of the accident. Others will allow you to collect all damages, but only if the accident was serious and your damages exceed a set threshold. It's wise to work with a lawyer to determine how your state will apply this rule to your case.

Uninsured Defendant

Your lack of auto insurance coverage can also hamper your recovery efforts if the other party is uninsured too. All states fall in two broad categories of auto insurance laws: no-fault and at-fault laws. In states that follow no-fault laws, everyone collects coverage from their insurance carrier irrespective of who is at fault. As such, you won't collect anything if you don't have coverage.

In states that follow at-fault laws, auto accident victims have to collect their damages from the liable party. You only collect your damages from your auto insurance company if the liable party doesn't have insurance coverage.

In case of an accident with an uninsured motorist, you can only collect damages from your carrier if you have uninsured motorist coverage. However, if you don't have insurance coverage, it also means you don't have uninsured motorist coverage. That means you won't be able to collect damages from any insurance company.

A lack of auto insurance coverage doesn't mean that you don't deserve any form of compensation. Contact law firms like Palmetto Injury Lawyers to help you navigate your case and get the best compensation possible.