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A Car Insurance Company Is Suing You (Now what?)

UPDATED: August 7, 2020

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Overview

  • If you were in a car accident and the other driver’s car insurance company sues you, your insurance provider will hire a lawyer to defend you under the car accident lawsuit provisions of your auto insurance policy.
  • Your insurance company will pay up to the limit of the policy. That means if the plaintiff gets a judgment against you in excess of your coverage, you would be responsible above that amount.
  • If you or your insurance company settles your car accident lawsuit, the settlement agreement should include a full and general release, including a waiver of subrogation claims.
  • If someone sues you for a car accident, you should immediately notify your insurance company; if you don't give proper notice, your insurer may not be obligated to pay for a lawyer to defend you.

You expect your auto insurance to cover you for damages to others in a car accident, so what if a car insurance company is suing you. Even with auto insurance, you still can be personally sued for a car accident if your insurance company isn't able to negotiate a settlement of the claim.

You could also be sued in a subrogation lawsuit where a car insurance company tries to sue you for the money it paid to its insured as a result of that accident. Regardless of the reason, contact your insurance provider immediately to discuss what happens if an insurance company is suing you for a car accident.

Knowing when to hire a car accident attorney isn't easy, but when you get there, you can also enter your ZIP code here and find an attorney in your area to learn more about what you need to do if someone sues you for a car accident. 

Can you be personally sued for a car accident?

Can someone sue you for a car accident if you have insurance?

Whether you can be personally sued for a car accident depends on if you live in a no-fault state. In no-fault insurance states, determining who is responsible for the accident is removed because, by state law, the insurance company will pay the damages to the victim.

If you live in one of the following no-fault places, then currently you cannot be sued for an auto accident:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah
  • Puerto Rico

If you don’t live in one of the above states or Puerto Rico, can a car insurance company sue you?

Yes, if you don’t live in a no-fault state, you could end up getting sued by the car insurance company itself or the driver individually after an auto accident. If you're sued for a car accident with no insurance, any amount of damages awarded would come out of your pocket.

What happens if an auto insurance company sues you?

To answer the question of what happens if a car insurance company is suing you, you first have to ask why you are being sued.

What happens if an insurance company sues you for car accident damages?

Even though you have car insurance, if the other driver’s claim isn’t settled between the insurance providers, then the other driver’s car insurance company can personally sue you. You will be named personally because you, and not the insurance company, was the driver alleged to have caused the accident and resulting damages.

Even still, what your car insurance company will do for you during a lawsuit may surprise you. Most companies will provide a car insurance attorney since you being found guilty will cost them money up to the limits of your policy.

The car insurance company also needs to name you to hold you personally responsible in case the damages award is higher than your policy limits. The limits of liability stated in your auto insurance policy are the maximum amount of coverage, i.e., money, your car insurance company will provide in the event you are found liable for any damages resulting from a car accident.

It is possible for a court to hold you liable for damages above your car insurance policy limits

What happens if an insurance company sues you in a subrogation claim?

What if the other driver’s provider brings an insurance subrogation claim against me? Subrogation is a legal process that allows an insurance company to sue a third party to recover the money it paid to its own insured after a car accident. A subrogation claim is pursued in the name of the insured against the third party or the third party’s insurance company.

An insurance company will pursue a subrogation claim after it settles the claim with its insured. The insurance company then goes after the party who was at fault in the car accident for reimbursement of the amount it paid to its insured.

Defending a Subrogation Claim When You Have Insurance

If you have insurance, then your insurance company will handle the subrogation action brought against you as part of your policy’s lawsuit coverage, so long as you have properly notified your insurance company of both the accident and any subrogation demands, claims or lawsuits. Assuming your insurance carrier is properly notified, it will step in and handle the subrogation claim on your behalf. 

Defending a Subrogation Claim When You Do Not Have Insurance

Many auto insurance companies will sue you even if you do not have insurance. If you do not have insurance for the accident, then you will have to defend the subrogation claim yourself. That means you will be responsible for hiring your own lawyer and paying the costs of the litigation.

Can my car insurance company sue me?

Can your auto insurance company sue you? Insurance companies typically don’t bring civil lawsuits to sue their own insured. But, an auto insurance company can bring criminal insurance fraud charges against applicants, policyholders, third-party claimants, and professionals who provide insurance services. Insurance fraud can be “hard” or “soft,” and both kinds are serious crimes.

Hard Insurance Fraud

Hard fraud is when someone deliberately and illegally fakes an accident, injury, theft, arson, or other loss to collect money from insurance companies. Many act alone, but increasingly, organized crime rings stage large schemes that steal millions of dollars.

Soft Insurance Fraud

Soft fraud is when people tell “little white lies” or intentionally omit facts or important information to their insurance company. Some examples are when a car owner inflates a fender bender claim to cover her deductible, or a homeowner inflates the value of his stereo equipment stolen during a robbery. These acts may seem small, but they are crimes.

Can I be sued after an insurance settlement?

Can someone sue you after insurance pays? If your insurance carrier settles a car accident claim with the other party’s insurance company, the settlement agreement should include a release of any and all claims against you, whether brought by the other party or their insurance company, relating to the car accident.

Before you sign off on any settlement, make sure there is a full release, including a waiver of subrogation. A waiver of subrogation is an agreement that prevents the other driver’s insurer from going after you as the at-fault driver. 

What should you do if someone sues you for a car accident?

If an auto insurance company is suing you, you need to talk to your own insurance company as soon as possible. Most auto insurance policies provide car accident lawsuit coverage. That means your insurance company will pay for a lawyer to defend you if the other driver’s car insurance company tries to sue you.

Your insurance company is under a duty to negotiate the other driver's claim in good faith. Remember, if the parties don’t settle and a jury awards damages in excess of your auto insurance policy limits, you will be personally liable to the plaintiff for that amount.

You need to stay involved with your insurance company and the lawyer defending you to make sure they don’t fail to settle the car accident lawsuit brought against you. If you get sued because your insurer failed to settle in good faith, your insurance company could be liable to you.

If you didn't have car insurance and got in an accident and now the insurance company is suing you, you can't rely on your insurance company. If you get a demand letter, it's best to respond promptly, even if you haven't found an attorney.

If you need to know what to write in a defense letter when being sued by another person's car insurance but haven't yet found a lawyer, it's best to be brief and say very little. It's important to acknowledge the situation but limit your response to just that until you've found an attorney. 

If an auto insurance company is suing you for a car accident, what happens if the claimant doesn't appear in court? 

This would likely result in a weaker case for the insurance company, but is not the same as the plaintiff not showing up due to the subrogation that lets the insurance company stand in the shoes of the other driver. 

Can my car insurance company sue me?

Usually, a car insurance company won't sue its own clients. The most likely exception to this is if the company suspects an attempt at insurance fraud. 

Get Help

Whether it is a typical car accident lawsuit or a subrogation claim, you need to act quickly if a car accident insurance company is suing you. Even though your own insurance policy will cover your legal fees in a car accident lawsuit, you still could be personally liable if the award exceeds your policy limits.

Figuring out what lawyer you need if an insurance company is suing you for a car accident may not be easy.

If you think it's possible that the amount of damages will exceed your car insurance policy’s limits of liability and you’re having trouble with your adjuster and your insurance company appointed attorney, you can enter your ZIP code here and talk to an insurance lawyer about your rights and options when a car insurance company sues you.

Find the Right Lawyer for Your Legal Issue!

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Call us today for a free consultation (855) 466-5776