Assume you get in an accident that is your fault and cause $300,000 damage to a $1,000,000 Lamborghini. Your insurance pays up to $100,000 in property damage. Are you responsible for the remaining $200,000? What if it was a rare $10 million dollar car that was totaled (you just dented it, but the car is very fragile)?



The concept of liability for damages is to place the wronged party in the same position that they would have been in but for the wrongful act.

If restoring their car costs $300,000 then you are liable for $300,000. If the car is a total write off then you are liable for the cost of them getting an equivalent replacement, usually assessed at market value of the asset.


Insurance is a different concept. An insurance company agrees to indemnify you for liability for your negligence within the limits of your policy: these usually include a deductable and a limit and sometimes a co-payment.

You are liable to the wronged party - your insurer indemnifies you. If your insurance doen't cover all of your liability, you are responsible for the balance.

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    This isn't actually universal. There are jurisdictions (e.g the Netherlands) where the insurer is liable towards the owner of the damaged car. The insured party can still be liable for damage in excess of the limit, but that's a liability towards his insurer. – MSalters May 4 '18 at 8:34

You are responsible for whatever property damage you cause, and if you do not have sufficient liability insurance to cover that damage, the injured party may sue you for the rest. None of the $10 million cars are very fragile and would not be totalled by tapping it at 10 mph, but let's say you creamed a 1961 Ferrari 250 GT California SWB Spider by plowing into it at 200 mph, then you could be liable for a large chunk of change. There is no provision in the law that says a person can only be held responsible for e.g. the first million dollars of property damage. Since it is impossible to extract blood from a turnip, you might not actually have to pay the whole cost.

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    If you plow into a car at 200MPH, it’s more likely that your estate is going to be liable for the damage. – cpast May 3 '18 at 1:23
  • @cpast Unless, of course, you are driving a high speed train (e.g. in Japan) and are liable, for example, because a design flaw caused the tracks to be crossed by a road without a crossing gate. – ohwilleke May 3 '18 at 12:40
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    @ohwilleke: I don't think that high-speed rail has level crossings at all. A bit more on-topic, in general the design of transport infrastructure is aimed at preventing massive, expensive accidents. Speed limits are one way to achieve that, and violating those liits can definitely affect insurance payout. – MSalters May 4 '18 at 8:37
  • @MSalters " I don't think that high-speed rail has level crossings at all." That it why having one would be considered a "design flaw" although the example wasn't terribly serious. – ohwilleke May 4 '18 at 17:56

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