Can Someone Sue you for a Car Accident if you Have Insurance

March 19, 2019

Can Someone Sue you for a Car Accident if you Have Insurance

Are you Vulnerable to a Lawsuit with Insurance?

Short answer: yes, someone can sue you for a car accident if you have insurance. Even with insurance, someone can come after you for injuries or damages caused by a car accident. But if you have insurance, you may not have to worry about it. Liability coverage includes paying for lawyers to defend you. It is also known as Personal Injury and Property Damage coverage.


Does Car Insurance Protect you From Court?

In most cases, your insurance helps you when sued for a crash by paying for any legal expenses. There are exceptions of course, (see below) but for the most part, they will cover you. Many reasons exist why someone would sue you.

Most Common Reasons for a Car Accident Lawsuit

No Insurance

Without insurance at the time of an accident, a driver has no choice but to sue you to recover costs. This is one of the more common situations.

Inadequate Insurance

If you do have insurance, but not enough, this can also lead to a lawsuit. Most states have low minimums for liability. $25,000 for property damage and $50,000 for bodily injury. With $52,900 being the average bodily injury claim, one can see how insurance coverage limits may not provide adequate protection. When damages exceed these limits, the other driver may sue to recover the rest.

Process Taking too Long

The third path for lawsuits comes from delays in the claims process. States each have different statutes of limitations (how long someone has to sue before it has been too long). If an insurance claim drags on, the aggrieved driver may file a lawsuit to try and put pressure on the process. Doing so also stops the clock on the statute of limitations. So sometimes driver’s will sue as a pre-emptive “just in case” even though insurance will likely take care of it.

Typical Scenario

Fault (Tort) State

Most states have fault (also known as tort) based laws. In these states, who was negligent in an accident dictates what happens with liability and compensation. Drivers can sue one another as they see fit. Let us say they receive a favorable judgment against you. They could recover medical bills, lost wages, property damage, and mental and physical pain and suffering. Insurance will provide funds for recovery (up to the policy limits of course). If you do not have any or enough insurance, they can demand payment, or garnish your wages if payment is not forthcoming.

Determination of fault

With some accidents, ascertaining fault is easy. In many others, the case can get murky fast. Complicating things further, differing groups may have different judgments of fault. The police may have a different opinion than an insurer, who may yet have a different opinion than a court.

Law enforcement may create a police report for an accident either at the scene or afterward. Their report may state who lies at fault, along with who received citations for what. Once a driver files a claim, insurers on both sides will assign an adjuster to investigate.

To determine fault, insurers will interview witnesses, examine medical reports and vehicle damage. They will also verify details about the insurance policies of the drivers involved. They may also use the police report but have no obligation to come to the same conclusion.

Similarly, if sued, the court may reach yet another determination of fault. Courts sometimes dismiss police reports, labeling them as hearsay. Other times, courts will use whoever received citations as the determiner of fault. Otherwise known as negligence per se.

map of no fault and threshold and tort
Map of fault vs no-fault states (learn more)

No-Fault State

In no-fault states, drivers seek compensation from their own insurance coverage. So fault becomes a non-issue. There is an exception to this though. Some no-fault states have provisions that allow drivers to sue for extra compensation. Depending on the state, either the injury or damages must exceed an established threshold. States define this limit either verbally or monetarily. Verbal would be something like severe injury or death, while monetary would cover damages exceeding a certain dollar amount.

What should I Do if Someone Sues me for a Car Accident?

Speak to a Lawyer

While costly, consulting with a lawyer about the specifics of your case can help. Since every state sets their own rules, having a lawyer familiar with your specific state can save you in the long run.

Does Insurance Provide a Car Accident Lawyer?

Generally, yes. Part of your insurer’s job includes their duty to defend you in court. There are of course exceptions, listed below.

Exceptions When your Insurance may not Provide a Lawyer

No Notice of Accident

The policyholder may neglect to notify the insurer of an accident within the time limit allowed by the policy. If this occurs, it may void the insurer’s duty to defend. When reading the policy, look for language about your duty to notify the insurer of accidents within a certain window of time. These windows may be as short as 5 to 10 days, though most insurers have wider windows. An exception to these rules generally applies with extenuating circumstances. If you were seriously injured or hospitalized for instance, you would likely have some degree of amnesty.  

Intentional Act Causing Car Accident

Another wrinkle that can void an insurer’s obligation to defend is if the policyholder acts intentionally to cause the accident. Insurance generally only protects against negligent actions, not intentional ones. Thus, if they can show intent behind an accident, they will not provide coverage or legal protection.

Damages Exceed Policy Limit

The last exception is when damage paid by the insurer exceed the limits of policy coverage. If you have $50,000 in coverage for property damage and you put a hole in someone’s house with your car, it may cost more to repair than that. In that circumstance, the legal bills and damages would be yours to pay after the $50,000 mark. Worth noting is that these rules vary by state, so consulting with a lawyer can be useful.

Common Myths

I can settle my personal injury claim with the “at fault” driver’s insurance company and still sue the driver who caused the accident.

Nope. When an insurer settles a claim you have to sign a release. The release will prevent any other claims against the other driver.

The “at fault” driver’s insurance must cover my lost wages and medical bills as they arise.

No. The insurer for the at-fault driver has no obligation to pay your ongoing medical bills or lost wages. The only time they would pay your lost wages or medical bills is when the insurer settles the claim. Or if a jury determines a driver’s negligence with a judgment entered against them.

If I go to court, I can tell the jury that the other driver has insurance.

Generally, you can not do this, except under limited circumstances. Typically, the jury never gets told that the other driver has insurance.

If I do not settle my claim with the other driver’s insurance company, I can sue their insurance company.

Nope, it does not work like that. You would need to sue the person you think caused the crash. Their insurance company would then hire the lawyer to protect them.

The insurance company admitted liability or fault and paid my property damage claim. They are bound by this and will also pay my bodily injury claim.

No. The other driver’s insurer may cover your property damage claim. That does not mean they will also approve your injury claim. If taken to court, their payment for property damage does not automatically mean they must cover bodily injury.

My doctor informed me that an accident “possibly” caused an injury. The other driver or his insurer must compensate me for that injury.

It is not quite that simple. At the least, your doctor would have to say that the injury is “probably” or “likely” due to the accident. Even then, the other insurer may contest this judgment.

If the other car’s owner that caused the crash differs from the driver, the owner has responsibility.

This is not always true. Generally, the owner needs to have involvement or negligence in allowing the driver to take their car.

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