80/20 Auto Insurance Settlement: Simply Explained (2024)
An 80/20 auto insurance settlement is one that shares the blame between two drivers with the driver who is mostly at fault covering 80 percent of the damages. An 80/20 car insurance settlement is just one of many ways insurance companies can decide to split the blame between drivers. You may see a 50/50 settlement or 70/30 settlement depending on the kind of accident you've been involved in, but 80/20 auto insurance settlements are the most common.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
UPDATED: Dec 15, 2023
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Dec 15, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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If you’ve been dealing with a car insurance claim, then you may have been approached with an offer for an 80/20 insurance settlement.
What is an 80/20 insurance settlement? Should you accept an 80/20 auto insurance claim? Today, we’re explaining everything you need to know about an 80/20 car insurance settlement and how insurance claims work.
An 80/20 Auto Insurance Settlement Shares Blame Between Two Drivers
Car insurance companies need to determine fault after an accident. The insurance company of the at-fault driver will pay the insurance company of the not-at-fault driver.
With some claims, this process is very straightforward. The at-fault driver rammed into the not-at-fault driver at a stoplight because he was using his phone, for example. The at-fault driver is 100% at-fault.
In many claims, however, fault can’t be determined after a car accident easily. Some claims get split 50/50, with both drivers sharing an equal percentage of the blame.
With other accidents, the blame is split 80/20, which means one driver was mostly at fault but the other driver also played a role. One driver clearly caused the accident (giving them 80% of the blame), but the other driver’s actions also played a role in the accident (giving them 20% of the blame).
80/20 is just one possible blame ratio. Insurance companies might also use 90/10, 70/30, 60/40, or whatever other ratios they deem accurate.
Read more: What is the difference between a first-party claim and a third-party claim?
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Examples of 80/20 Accidents
There are many situations where an 80/20 insurance claim could emerge.
Sometimes, we see 80/20 insurance claims with rear-end collisions. Who is at fault if you rear-end someone who slammed on their breaks is difficult to determine. Typically, a rear-end collision is 100% the blame of the rear driver. However, we sometimes see a portion of the responsibility assigned to the front driver. The front driver might have “brake checked” the rear driver, for example, or stopped short of an intersection. The rear driver is still more at fault for driving too fast or too close to the front driver, but the front driver is not blameless here.
In other cases, we might see an 80/20 insurance settlement for a T-bone accident at an intersection. Driver A might have made an unsafe left turn in front of Driver B. Driver B collides with Driver A. Driver B is mostly at-fault because Driver B made the hazardous turn. However, Driver A might be found at-fault because Driver B was speeding.
Ultimately, every accident situation is different. Insurance companies will use police reports, witness statements, dashcams, and other evidence to determine fault after an accident accurately.
What Does an 80/20 Car Insurance Settlement Mean for Compensation?
With an 80/20 insurance settlement, the at-fault driver’s insurance company will pay 80% of the compensation, while the not-at-fault driver’s insurance company will pay 20% of the compensation.
You are 80% at-fault for the accident, so you (or your insurance company) will pay 80% of the compensation owed. As the at-fault driver, you are entitled to only 20% of the amount awarded, as you are liable for the other 80%.
Be Wary of 80/20 Insurance Settlements
It’s in the insurance company’s best interest to reach an 80/20 insurance claim. It lessens the financial cost for one insurance company, shifting at least a portion of the blame (and a part of the payout) to the other driver’s insurance company.
Some shady insurance companies will use 80/20 insurance claims to their advantage.
Your claims adjuster, for example, might urge an 80/20 insurance claim if they find that the innocent driver doesn’t have insurance. In this case, the innocent driver has no way to claim the additional 20%, which saves the car insurance company money.
If you were not at-fault for an accident in any way, then you should not be assigned any blame. If a claims adjuster is pushing for an 80/20 insurance claim, then it’s within your right to push back. If the insurance company continues to insist on an 80/20 insurance claim without merit, then consider hiring a lawyer.
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Consider Hiring a Personal Injury Lawyer
Agreeing to an 80/20 settlement is an important decision for several different reasons.
Many states have proportional comparative fault laws, for example. This law states that you cannot file a lawsuit against another driver if you were more than 51% at fault for the accident. If you get into an accident and were mostly at-fault for the accident, then you may not be able to file a lawsuit against the other driver.
In some states, you cannot claim any compensation after an accident if you receive any blame.
Agreeing to an 80/20 settlement can also play an essential role in compensation both today and in the future. It could reduce your ultimate payout from the insurance company. It could make it more challenging to claim whiplash and other damages.
Every 80/20 accident situation is different, which is why we recommend talking to a lawyer if you disagree with your insurance company’s findings.
Read more: Does auto insurance cover whiplash symptoms?
Final Word
An 80/20 insurance settlement assigns 80% of the blame to one driver and 20% of the blame to another driver. It’s a typical insurance settlement for situations where one driver is mostly to blame, although the other driver also played a small role.
If you were absolutely not at fault for the accident, then never accept an 80/20 insurance claim. Insurance companies may use 80/20 insurance settlements for their own benefit – at your expense. Consider talking to a lawyer to ensure you get fair treatment after a car accident.
Frequently Asked Questions
What is an 80/20 auto insurance settlement?
An 80/20 auto insurance settlement refers to a specific type of settlement arrangement between an insurance company and the policyholder after a car accident. In this scenario, the insurance company typically agrees to pay 80% of the total claim amount, while the policyholder is responsible for covering the remaining 20%.
How does the 80/20 auto insurance settlement work?
When an insurance company agrees to an 80/20 settlement, they will pay 80% of the total claim, and the policyholder is responsible for paying the remaining 20%. For example, if the total claim amount is $10,000, the insurance company would pay $8,000, and the policyholder would be responsible for paying the remaining $2,000.
Why would an insurance company agree to an 80/20 settlement?
Insurance companies may agree to an 80/20 settlement for various reasons. It could be due to a policyholder’s limited coverage or policy terms that specify a percentage-based co-payment. Additionally, the settlement amount could be influenced by factors such as fault determination or the terms of the insurance policy.
Do all auto insurance policies have an 80/20 settlement option?
No, not all auto insurance policies have an 80/20 settlement option. The availability of this type of settlement arrangement depends on the terms and conditions outlined in the insurance policy. It is essential to review your policy documents or consult with your insurance provider to understand the specific settlement options available to you.
What factors influence an 80/20 settlement arrangement?
Several factors can influence an 80/20 settlement arrangement. These may include the terms of the insurance policy, state laws governing insurance claims, the degree of fault assigned to each party involved in the accident, the nature and severity of the damages, and any other relevant circumstances specific to the incident.
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Tim Bain
Licensed Insurance Agent
Tim Bain is a licensed insurance agent with 23 years of experience helping people protect their families and businesses with the best insurance coverage to meet their needs. His insurance expertise has been featured in several publications, including Investopedia and eFinancial. He also does digital marking and analysis for KPS/3, a communications and marking firm located in Nevada.
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.