Can I get sued even if I have car insurance?

The primary purpose of liability insurance is to pay for damage or injuries that you cause so that your assets are protected from lawsuits. Because you are legally responsible for an at-fault accident, you are required to pay for the damage you cause. If you do not have insurance, you can be sued for that money. Unfortunately, in some situations you can still face a lawsuit even if you do have insurance.

Your state will require you to carry a minimal amount of liability insurance on your vehicle. The required minimum varies from one state to the next, so be sure to check with the DMV to see how much coverage you need to buy. If you can afford it, you may wish to increase the limits of your liability insurance. Car accidents, especially severe accidents or those causing damage to multiple vehicles, can quickly become very expensive.

If your insurance limits are exhausted, you will be responsible to pay the remaining balance of the claim out of your pocket. With vehicle damage, this is fairly straightforward as you will only need to pay for the cost of repairs or the replacement of a vehicle. Injuries can become much more complicated. You will owe the other party not only for doctor’s visits and prescriptions but also lost wages, pain and suffering, and possibly other expenses as well.

What happens when I’m at Fault for an accident?

The other person’s car insurance company will first file a claim against your policy if one has not already been filed. Once the policy has been exhausted, your insurance company will notify you that no further payments can be made and will issue a partial denial to the other company. At this point, the other party’s insurance will contact you to arrange for a settlement. Usually they will make a payment arrangement through a collections agency.

Depending on the laws of your state, the other party can also take you to court. Some states have laws regulating this; known as no-fault states, these areas require a person to exhaust his own insurance coverage before filing a lawsuit and limit what a person can claim through a lawsuit. Most states do not have no-fault laws, however, so people in the majority of states are able to sue freely for injuries or damage.

What if my car insurance doesn’t cover the full claim?

You may be able to use other types of coverage in order to compensate for the gaps in your auto insurance. For example, some states will allow you to pull coverage from another vehicle in order to supplement your vehicle’s policy; this allows you to use the liability insurance from other cars you insure to cover a claim. Stacking coverage in this way isn’t legal in all states, but your insurance adjuster will let you know if it’s an option in your situation.

Some homeowner’s policies also include some form of personal umbrella policy or other type of personal liability insurance. This type of insurance is used to protect you from lawsuits for any situation that you are held liable for, including car accidents. Personal liability insurance usually has a very high limit. If you don’t already have this type of policy, you can ask your agent how much it would cost to add it to your existing homeowner’s policy.

What if there is no other coverage available?

Whenever you are found at fault for an auto accident, you must make arrangements to pay for the damage in a timely manner. Your driver’s license may be suspended until you are able to pay off the claim, and your insurance company may even drop you. Reinstating your policy could prove difficult until your claim has been settled.

It’s a good idea to obtain a lawyer who is well-versed in insurance law any time you are involved in a serious accident. This way, you will have some support if you are taken to court for the accident. Your attorney will be able to negotiate the settlement price and help you satisfy the claim for a reasonable cost.

Of course, the easiest way to avoid a lawsuit is to drive carefully and always maintain sufficient coverage on your vehicle. By understanding how much coverage you have on your policy and adjusting it accordingly, you can protect yourself and your assets against any future claims that may be filed against you.

Case Studies: Liability Insurance and Lawsuits

Case Study 1: The Insufficient Coverage

In this fictional case study, John is involved in a car accident where he is at fault. He has car insurance but with minimal liability coverage, which is exhausted due to the severity of the accident. As a result, John is faced with a lawsuit and is personally responsible for paying the remaining balance of the claim out of his pocket.

Case Study 2: The No-Fault State Laws

Sarah lives in a no-fault state and is involved in an at-fault car accident. The other party’s insurance company first files a claim against Sarah’s policy. When her insurance coverage is exhausted, the other party’s insurance contacts her to arrange a settlement. However, if Sarah’s insurance was insufficient to cover the damages, the other party could take her to court to seek additional compensation.

Case Study 3: Supplementing Auto Insurance

In this case study, Mark has car insurance that doesn’t fully cover the claim resulting from an accident. Fortunately, his state allows him to pull coverage from another vehicle he insures to supplement his current policy. By utilizing this option, Mark can compensate for the gaps in his auto insurance and fulfill his financial obligations.

Case Study 4: Personal Liability Insurance

Emily has a homeowner’s policy that includes personal liability insurance. When she is at fault in a car accident, she discovers that her homeowner’s policy covers personal liability for situations like car accidents. This coverage provides additional protection and a higher limit, allowing Emily to compensate for the damages beyond what her auto insurance can cover.

Case Study 5: The Importance of Legal Support

In this case study, Mike is involved in a serious accident where he is found at fault. Recognizing the potential legal complications, Mike hires a lawyer who specializes in insurance law. The attorney helps him negotiate the settlement price and navigate the legal process, ensuring that he satisfies the claim for a reasonable cost.