What it is
Comparative Liability is a term that insurance companies use when both drivers in an accident have some degree of fault, but neither party is completely responsible. It should be simple enough, but confusion arises while trying to figure out how much money will come out of your pocket, and how it will affect your future rates.
The easiest way to understand this type of insurance claim is to take an example, and follow it to conclusion. A really common example is when two people back into each other in a parking lot.
First things first, there should be some agreement that there is comparative liability. If both drivers agreed that they were both backing up and didn’t see each other, or they both thought the other driver was going to stop, and both drivers were honest and level headed, able to take responsibility for this particular mistake, and willing to admit that they were partially at fault, then this would be an easy to resolve, simple 50 / 50 accident.
I’ll explain in a minute how this is resolved, but first you should know that it hardly ever goes down like this.
Usually both parties think the other party is at fault, and blame the other person. Both drivers usually claim that they backed out first, and accuse the other driver of lying.
Keep in mind that just because they were both backing, doesn’t mean it is automatically comparative liability, but there are usually no witnesses, and no way to prove anything.
Sometimes the damage on the vehicles will support the claim that one driver had “taken possession” of the isle, and had the right of way. For example, if one driver’s damage was in the middle of the back bumper, and the other driver’s damage was on the passenger side door, it would support the claim that the driver with door damage had backed all of the way out, taken possession of the isle, and had the right-of- way
For this example, since I’m explaining comparative liability, let’s assume that neither driver can prove he has the right of way, and both drivers are equally at fault and assigned 50% of the blame. In this example both drivers’ insurance adjusters agree to settle the claim as a 50 / 50.
This is the way your expense would break down:
If you went through your own insurance, you would pay a percentage of your deductible equal to your liability. So for a 50 / 50 accident you would pay 50% of your deductible.
You would pay the deductible at the body shop after your car was repaired. Your own insurance would cover the other half of the deductible, as well as the entire amount of the remaining cost of repair, because collision coverage covers the cost of repair, less the deductible, regardless of who was at fault. Your insurance is going to collect the other 50% of your deductible from the other driver’s insurance.
Your insurance would later send a copy of the repair estimate to the other insurance company, and be reimbursed for 50% of the repair of your car. They are simply being reimbursed for the amount of the repair that wasn’t your fault. Your insurance company will also write a check to pay for half of the other driver’s repair.
No Collision Coverage?
If you don’t have collision coverage, you will be forced to go through the other insurance company for your repair. Since you are going through the other insurance, there is no coverage for the percentage of the accident that was your fault. The other driver’s insurance company will estimate the cost of repair, and send you a check for 50% of the repair.
You will only be paid for the portion of the repair that was the other driver’s fault, which in this example is 50%. It would break down as follows:
Now that we have covered the very basics, there is something else you should know.
You should know that the insurance adjusters do not have to agree to do comparative liability. Your insurance could call it a 50 / 50, and the other driver’s insurance could decide you were 100% at fault. The good news is that your insurance company might still pay the percentage of your deductible based on their own liability determination, independent of the other insurance company’s liability position.
On the other hand, they may remind you that you are responsible for your deductible, in which case you will have to try to collect it from the other driver’s insurance. Considering they are not agreeing to comparative liability, you chances of collecting are zero, but you may get reimbursed if your insurance wins in arbitration. (discussed below)
Your future rates are based on your insurance company’s liability determination, independent of the other insurance company’s liability determination. Typically, no matter what amount is paid on a claim, the accident will not count against you unless you were more than 50% at fault, so a 50 / 50 should not affect you negatively. Obviously I cannot speak for every insurance company, so you should verify this with your adjuster.
It should also be noted that if the insurance companies do not agree on comparative liability percentages, the claim will eventually end up in arbitration. In this example, your insurance company would be arguing it was 50 / 50, and the other arguing that you were 100% at fault. If the final determination after arbitration is that you were more than 50% at fault, it may affect your record adversely. In other words, you would have an “at fault” accident on your record that could make future insurance rates higher.
Hopefully this post was helpful explaining comparative liability, and how it affects your wallet. Keep in mind that if I covered every possible scenario it would be a book, not a post, but I’m happy to answer questions.
If you have any questions please send me an email, or just ask your question in the comments section below. I’ll try to get back to you the same day.