The insurance company is only contracted to pay a certain amount. For example if your insurance policy is for $25,000, that is all the insurance company would have to pay even if the damages for the other party were $1,000,000. If the insurance company is unable to settle the case for the policy limits then the injured party will probably file a lawsuit against you. The insurance company is obligated to defend you in that lawsuit. If a judgment is obtained for more than the policy limit then the insurance company will pay their maximum and you will be left to cover the remainder. However, if you do not have money to pay the judgment, collection activities can be pursued against you. This includes garnishing your wages if employed, seizing personal property and selling it at auction, placing a lien on your real estate or seizing money in your bank accounts. If you have nothing to seize, no real estate and no job you are "judgment proof". Essentially they cannot do anything because just like you cannot squeeze blood from a turnip, you cannot collect money from someone without any. They will be entitled to renew the judgment forever and if you ever do come into any money they may find out and collect against you then.
Bradley L. Henry
800 S. Gay St
Knoxville, TN 37929
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Your assets are at risk and your wages can be garnished.
Good luck to you.
NOTE: This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship and all the privileges that relationship provides. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question.