Skip to content

What Does Liability Insurance Not Cover in the Event of an Accident?

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

At Mike Agruss Law, we’re here to fight for your rights. We know that personal injury cases can be overwhelming and stressful, but we’re here to take that burden off your shoulders. Our team of professional and experienced lawyers will always put your needs first, prioritizing your case above all else. Because of this, we’re often asked questions regarding car insurance and liability limits. Let’s go further into the topic.

Man Holding His Head After A Car Accident

Better Understand Liability Insurance Coverage

Liability car insurance is a crucial aspect of auto coverage that is mandatory in most states, including here in Illinois. It serves to protect the insured from financial loss if they are at fault in an accident, covering damages to other people’s property and any injuries they may sustain. However, this protection is not all-encompassing. Liability coverage has its limitations and does not extend to all types of damages or costs resulting from a collision.

One of the most significant limitations of liability insurance is that it does not cover the insured’s own vehicle repairs or medical expenses. This means your own insurance company does not cover you in an accident. In the event of an accident, liability insurance will only address the third party’s claims against the insured, not the personal costs the policyholder may incur. Additionally, liability insurance does not cover costs that exceed the policy’s set limits, leaving the insured potentially liable for significant out-of-pocket expenses if the damages they cause surpass their coverage cap.

Understanding the scope of liability insurance is crucial for drivers to ensure they are adequately protected. Recognizing the gaps in this type of coverage can guide policyholders to supplemental insurance policies, such as collision and comprehensive coverage, which can provide additional financial protection. By knowing what liability insurance does not cover, drivers can make informed decisions about their insurance needs and avoid unexpected financial burdens following an accident.

Understanding Liability Insurance

Liability insurance plays a crucial role in providing financial protection against claims of injury or damage. It is designed to shield policyholders from the financial fallout of being found responsible for an accident or mishap.

Definition and Purpose

Liability insurance is a policy that can protect an individual or an entity from the financial losses associated with being held legally responsible for injury or damage to another party. This insurance covers the costs of legal defense and any awarded damages up to the policy limit. Its main purpose is to mitigate financial risk in the event of a lawsuit for circumstances such as negligence, personal injury, or property damage.

Limits of Liability Insurance

Liability insurance does not offer blanket protection and has limits. These limits dictate the maximum amount the insurance provider will pay toward a covered claim. There are typically two types of limits in a liability policy:

#1 Per occurrence limit: This is the maximum amount the insurer will pay for a single incident.

#2 Aggregate limit: This is the total amount the insurer will pay over the policy period, typically one year.

Policyholders may be financially responsible for any costs exceeding these limits. Additionally, liability insurance does not cover intentional damage or contractual liabilities. It is important for individuals and businesses to understand the exclusions and policy limits to ensure adequate protection.

Common Exclusions in Liability Insurance

Liability insurance is designed to offer protection against claims resulting from injuries and damage to people and property. However, certain exclusions are standard across most policies, detailing instances where coverage is not provided.

Intentional Damage or Injury

Liability insurance typically does not cover intentional acts where the policyholder causes damage or injury on purpose. Examples include assault or vandalism. Any scenarios where harm is inflicted with knowledgeable intent fall outside the coverage bounds.

Contractual Liabilities

Contractual liabilities are generally excluded from liability insurance. These are liabilities that a policyholder assumes when entering into a contract, beyond what common law would dictate. Essentially, if a business agrees to accept responsibility for certain incidents or actions in a contract, those specific liabilities aren’t covered by a standard policy.

Policy-Specific Exclusions

Liability insurance policies contain exclusions that are unique to each insurer, impacting coverage in the event of an accident. These exclusions are critical in understanding what is and isn’t covered under an insurance contract.

Exclusions Vary by Insurer

Every insurance company has its own set of policy exclusions. For instance, liability insurance in Illinois may commonly exclude coverage for:

  • Intentional acts: Insurers generally will not cover damages that result from intentional harm.
  • Contractual liabilities: Liabilities assumed under a contract may not be covered unless the liability would exist in the absence of the contract.
  • Work-related injuries: Typically covered under workers’ compensation, these are often excluded from general liability policies.

It’s essential for policyholders to be aware that exclusions can significantly differ not just by state, but from one insurer to another.

Reading the Fine Print

Understanding the specifics of liability insurance is crucial. In Illinois, as elsewhere, policy language is fundamental. The fine print will detail the nature such as the specific situations or actions that are not covered. There may be certain types of property damage or injuries that the policy does not cover.

Policyholders should thoroughly review their policies, particularly the exclusions section, to avoid any unexpected gaps in coverage. It’s recommended to consult with an insurance professional if there are questions or uncertainties regarding the policy details.

Exclusions Related to Vehicle Use

Liability insurance policies generally exclude certain scenarios related to the use of a vehicle. Understanding these exclusions is crucial for policyholders to avoid unexpected financial burdens in the event of an accident.

Unauthorized or Illegal Use of Vehicle

Liability insurance will not cover accidents that occur while the vehicle is being used without permission or for illegal activities. For instance, if a person takes a vehicle without the owner’s consent and is involved in an accident, the insurance company is likely to deny coverage for any damages or injuries resulting from that event.

Commercial Use Limitations

Insurance typically draws a distinct line between personal and commercial vehicle use. Accidents that happen when a personal vehicle is used for business purposes, such as ridesharing or deliveries, are not covered under standard liability insurance. To be fully protected, adding commercial or business auto insurance is essential for those using their vehicles for work-related tasks.

Role of Legal Support in Insurance Claims

When engaging with liability insurance claims, individuals often face complex legalities and policy interpretations that can profoundly impact their compensation. Legal support from a car accident lawyer proves critical in navigating these intricacies to ensure fair treatment.

The Need for Legal Advice

A personal injury lawyer becomes indispensable when translating the dense language of insurance policies into actionable information. For those residing in Illinois, a personal injury lawyer from Mike Agruss Law can clarify the scope of coverage and exclusions detailed in an insurance policy. This specialist provides critical advice that can help individuals understand their rights and the validity of their claims, especially in situations where policy details are ambiguous or heavily contested.

Disputing Insurance Denials

Legal professionals are adept at challenging insurance denials with evidence-based arguments. If an individual’s claim is unjustly denied, an experienced attorney can dispute this decision by detailed policy analysis and strategic legal action. Disparities in settlement offers and denial of valid claims are situations where legal expertise can significantly sway the outcome in favor of the policyholder.

Our knowledge of Illinois law and negotiation experience can compel insurance companies to re-evaluate their decisions and offer a settlement that aligns with the policyholder’s entitlements. This intervention is particularly crucial in cases involving substantial claims or where policyholders have encountered a firm rejection from their insurer.

In essence, the role of legal support in insurance claims is to empower individuals through informed guidance and to level the playing field against large insurance providers.

Personal Injury and Liability Coverage

When considering liability insurance in the context of personal injuries, it’s critical to know the extent of coverage and its limitations. Liability insurance typically covers bodily injury claims if one is found legally responsible for an accident, but there are notable exclusions.

Coverage for Bodily Injuries

Liability insurance provides financial protection for the insured if they are held legally responsible for bodily injuries to others. For instance, if a guest is injured on an individual’s property, liability coverage can help pay for medical expenses up to the policy’s limits. A Chicago personal injury lawyer from Mike Agruss Law can assist in navigating these claims, ensuring the injured party gets compensated while the policyholder’s assets are protected.

Exclusions of Personal Injury Coverage

However, liability insurance does not indemnify against all types of personal injury claims. Common exclusions include:

  • Intentional Acts: Injuries caused by intentional harm or illegal activities are not covered.
  • Contractual Liabilities: Personal liability insurance usually does not cover injuries under a contract that the insured is obligated to pay.
  • Business Activities: Injuries resulting from business or professional activities go beyond the scope of personal liability and require separate coverage.
  • Workers’ Compensation: Insurance does not substitute for workers’ compensation if an employee is injured on the job.

Understanding these exclusions helps policyholders recognize gaps in their coverage and where additional insurance might be necessary.

Property Damage Coverage Limitations

Liability insurance for property damage is pivotal after an accident, but it inherently has financial caps and exceptions. It is essential to understand what scenarios are covered and what falls beyond its scope.

Covered Property Damage

Property damage liability insurance typically helps pay to repair damage the insured causes to another person’s vehicle or property. Policies are designed to cover repair costs for vehicles, buildings, fences, and other personal properties up to a preset coverage limit provided by the insurer. The policy activates when the insured is at fault in an incident, ensuring compliance with most states’ mandatory insurance laws. For instance, if an insured driver crashes into someone else’s fence, the property damage liability can pay for the damage, often preventing the insured from facing hefty out-of-pocket expenses.

Uncovered Property Damage Scenarios

However, certain situations are not covered under standard property damage liability insurance. This includes:

  • Damage to the insured’s own vehicle: One should not expect property damage liability to cover their own car repairs; instead, collision coverage would be apt for the insured’s vehicle.
  • Damage above policy limits: Any cost overflowing the policy’s maximum will not be covered, leaving the insured person responsible for the remaining balance.
  • Intentional damage caused by the insured: Deliberate acts of destruction by the policyholder are not covered.
  • Normal wear and tear: Damages deemed as simple wear and tear over time are not included.
  • Use for commercial purposes: If damage occurs while using the vehicle for business without a proper commercial policy, it may not be covered.

We encourage you to review your policy to understand the specifics as they may vary between providers and individual policies. For a complete breakdown of property damage liability coverage, visiting reputable sources like Investopedia or Forbes Advisor can provide in-depth insights.

Accidents Involving Uninsured or Underinsured Motorists

When an accident occurs, liability insurance typically covers damages or injuries inflicted on others. However, if the at-fault party lacks sufficient insurance, uninsured motorist (UM) or underinsured motorist (UIM) coverage become critical.

Understanding UM/UIM Coverage

Uninsured Motorist (UM) coverage is specifically designed to protect individuals in incidents where the other driver has no auto insurance. This insurance steps in to cover medical expenses and, in some cases, lost wages or other damages. Underinsured Motorist (UIM) coverage is similar, but it applies when the at-fault driver’s insurance is insufficient to cover the damages incurred.

For residents of Illinois, state law requires that all motor vehicle policies include uninsured motorist coverage at the same limits as the policy’s liability coverage. This means that in Illinois, if a driver has liability coverage of $25,000 for bodily injury per person, their UM coverage must also be at least $25,000.

Liability Insurance Interaction with UM/UIM

Liability insurance does not cover the policyholder’s own damages or injuries. Instead, liability coverage is responsible for the costs incurred by the other party in an accident if the policyholder is at fault. In cases where the at-fault party cannot cover these costs due to being uninsured or underinsured, the not-at-fault party’s UM/UIM coverage can fill the gap.

In Illinois, for instance, if a driver with liability insurance gets hit by an uninsured motorist, their own uninsured motorist coverage would cover their medical expenses up to the policy’s limits. If the expenses exceed these limits and the at-fault driver lacks adequate insurance, underinsured motorist coverage would then be used to compensate for the additional amount, subject to the policy’s terms and coverage limits.

Special Considerations for Illinois Drivers

In Illinois, understanding the scope of liability insurance is crucial, as the state has specific guidelines and exclusions regarding coverage in the event of an automobile accident.

State-Specific Exclusions

Bodily Injury to the Insured: Illinois law does not require liability insurance policies to cover the insured’s bodily injuries. As such, the typical liability policy will not cover the medical expenses of the policyholder if they are at fault in an accident. For information regarding the exact parameters of this exclusion, it is important to refer to the Illinois State Bar Association’s guide.

Property Owned or Transported: Liability insurance in Illinois generally excludes coverage for damage to property owned by, rented to, or in the charge of the insured. This often includes personal belongings inside the vehicle.

Intentional Damage: Liability insurance does not cover any damages resulting from intentional acts by the insured, even if the insured causes harm to another party during the accident.

Vehicles Not Listed on the Policy: Any vehicle that is not specifically listed on the liability policy is usually excluded from coverage in the event of an accident.

Legal Requirements and Recommendations

Minimum Coverage Limits: Illinois drivers must adhere to specific insurance requirements, including minimum liability coverage of 25/50/20. This translates to $25,000 coverage for bodily injury per person, $50,000 for bodily injury per accident, and $20,000 for property damage per accident.

Uninsured and Underinsured Motorist Coverage: Illinois guidelines necessitate that drivers have uninsured and underinsured motorist coverage to protect against accidents with drivers who do not have sufficient insurance. This typically matches the minimum liability coverage amounts and can be critical in situations where the at-fault driver is unable to cover the costs incurred in the accident.

It is recommended for drivers in Illinois to consider insurance options that exceed the legal minimums for greater protection. Additional coverage such as collision, comprehensive, or medical payments can be prudent investments, given the limitations of liability insurance.

Steps to Take After an Accident

Navigating the aftermath of a vehicular accident can be complex and demanding. Understanding the correct procedures to follow ensures the protection of one’s legal and financial interests.

Immediate Actions Following an Accident

#1 Before anything else, ensure that all parties involved in the accident are safe. If injuries have occurred, calling 911 is the top priority.

#2 Take photos of both vehicles if possible, and note the specific damages. This will be crucial for insurance claims.

#3 Collect the insurance information from the other driver involved in the accident.

#4 Do not admit fault! It is important to avoid admitting liability or fault at the accident scene as this can be used against you in future proceedings.

When to Contact a Lawyer

If there are substantial damages or serious injuries, it is wise to contact a personal injury lawyer immediately. Mike Agruss Law can provide guidance and advocacy to ensure fair compensation. This is especially true when there is a dispute with an insurance company’s settlement offer or coverage, legal counsel can negotiate on your behalf.

Take The Next Steps With Mike Agruss Law

Remember, liability insurance typically excludes costs associated with damage to your own vehicle and any personal injuries you sustain in an accident. Here in Illinois, liability coverage will not pay for your vehicle repairs. Additionally, if you’re looking for compensation for personal injuries after a car accident, a personal injury lawyer from Mike Agruss Law might be necessary, as these costs fall outside standard liability coverage.

How to Proceed with an Insurance Claim

After an accident, it’s essential to promptly file a claim with the insurance company. Document all details of the incident and collect any evidence, such as photographs or witness statements. Considering the exclusions of liability insurance, those in Illinois might find it prudent to seek legal advice. Consulting with a personal injury lawyer from Mike Agruss Law can provide clarity on further steps, such as pursuing compensation for personal injuries outside of the liability insurance’s scope. You won’t pay us any legal fees unless we win your case!

Submitted Comments

No Comments submitted yet. Sharing your story will help others!

We are listening

We will respond to you at lightning speed. All of your information will be kept confidential.

Form successfully submitted!