Property damage liability is a type of car insurance. In this article, we’ll define the term “property damage liability” and explain how it relates to auto accident law and bankruptcy law.
Property damage liability insurance is a type of car insurance that covers the insured person in the event that they damage somebody else’s property in an accident. This can be a variety of types of property including:
Most states require drivers to have property damage liability insurance, with the exact amount required varying from state to state.
The amount of property damage liability insurance required by each state is listed below.
If you don’t have property damage liability insurance and are held liable for damaging another party’s property with your car, you will have to pay the cost of the damages out of pocket. This can be a tremendous sum that can contribute or lead to filing for bankruptcy. In this situation, you may wonder if, like other debts, the money you owe for the property damage will be discharged as part of your bankruptcy process.
Usually, the answer is yes. However, there are two situations in which this debt will not be discharged.
In short, as long as you were sober and the accident was indeed accidental, the money you owe for property damage can be discharged if you file for Chapter 7 bankruptcy.
Now what about if you file for bankruptcy and are owed money from somebody else’s property damage liability insurance if they damaged your property with their car? Must you list these insurance proceeds as an asset that will be added to your bankruptcy estate, seized, and distributed to your creditors? If the property that was damaged is exempt property, the answer may be no. However, this varies on a case by case basis and it is highly recommended to ask your bankruptcy lawyer who will be able to help you understand what will happen with your particular bankruptcy case.