How an Auto Liability Claim Works: A Step-by-Step Guide

Auto accidents are stressful, and insurance can feel confusing—especially when you hear the term liability claim. As insurance agents, one of the most common questions we hear is: “What actually happens after an accident?”

This guide walks through how an auto liability claim works, step by step, with real-world examples to make it easier to understand.

Step 1: The Accident Happens

An auto liability claim begins when a driver causes an accident that results in:

• Injuries to someone else, or

• Damage to someone else’s property (another vehicle, a fence, a mailbox, etc.)

Liability coverage is designed to protect you if you are legally responsible for the accident. It does not pay for your own car repairs or injuries.

Example: You accidentally rear-end another car at a stoplight. The damage to their vehicle and their medical bills would fall under your liability coverage.

Step 2: The Claim Is Reported

The accident is reported to the insurance company—usually by the at-fault driver, but sometimes by the other party.

The insurer will collect basic information such as:

• When and where the accident happened

• Who was involved

• Photos of the damage

• Police report details (if there is one)

A claim number is created and a claims adjuster is assigned to handle the case.

Step 3: The Claims Adjuster Investigates

The adjuster’s role is to understand what happened and who was responsible.

They may:

• Talk to both drivers

• Review the police report

• Look at photos or videos

• Speak with witnesses

• Review damage estimates and medical bills

This investigation helps the insurance company determine fault.

Step 4: Liability Is Determined

Liability means legal responsibility for the accident. After reviewing the facts, the insurance company decides whether their driver is:

• Fully at fault

• Partially at fault

• Not at fault

Fault is not always all-or-nothing—sometimes both drivers share responsibility.

Example 1: One Driver at Fault

You run a red light and hit another vehicle that had the right of way. You would likely be considered fully at fault, and your liability insurance would pay for the other driver’s damages.

Example 2: Shared Fault

You make a left turn in front of another car, but that driver was speeding. The insurance companies may decide both drivers share responsibility, and fault could be split between them.

Step 5: Damages Are Evaluated

If the insurer accepts liability, the adjuster reviews the damages, which may include:

• Vehicle repair or replacement costs

• Medical bills

• Lost wages

• Pain and suffering (in injury cases)

All payments are subject to the policy’s liability limits, which cap how much the insurance company will pay.

Example: If your policy has a $50,000 bodily injury limit and the injured party’s medical bills total $60,000, the insurer can only pay up to $50,000. Any amount above that could become the at-fault driver’s responsibility.

Step 6: A Settlement Is Offered

Once damages are calculated, the insurance company makes a settlement offer to the injured party.

This may involve:

• Paying a repair shop directly

• Paying medical providers

• Issuing a settlement check to the claimant

If the injured party accepts the settlement, they usually sign a release agreeing the claim is resolved.

Step 7: The Claim Is Closed

After payment is made and all paperwork is completed, the claim is closed.

Depending on the situation:

• The at-fault driver’s insurance premiums may increase at renewal

• The accident will remain on driving and insurance records for several years

Final Thoughts

An auto liability claim is about determining responsibility and making sure people harmed in an accident are compensated fairly. While the process may seem complex, each step follows a logical path—from investigating what happened to resolving damages.

If you ever find yourself unsure about what to do after an accident, you don’t have to navigate it alone. The experienced agents at Insurance Connection are here to help and guide you every step of the way, from understanding your coverage to answering questions throughout the claims process.