UPDATED: Mar 13, 2020
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Can a car insurance company sue you? Can you be sued by your own car insurance company? Can you be sued by another driver’s car insurance company? Today, we’re answering all your questions about whether or not a car insurance company can sue you.
You Cannot Be Sued for a Car Accident in Certain States
First, let’s get something out of the way. If you live in one of the following states, then you cannot be sued for an auto accident. That’s because all of the following are “no fault” states. Even if you cause an accident in these states (or one territory), then it’s unlikely that you’ll be sued:
- New Jersey
- New York
- North Dakota
- Puerto Rico
If you don’t live in one of the above states, however, then you could be sued after an auto accident. You might be sued by the other driver’s car insurance company, for example, or the other driver.
Can Your Own Car Insurance Company Sue You?
Is it possible to be sued by your own car insurance company?
Typically, a car insurance company will not sue its own clients.
However, an auto insurance company could sue you if they believe you’ve participated in insurance fraud. In this case, prosecution by your insurance company is likely.
The best way to avoid insurance fraud – or accusations of insurance fraud – is to be thorough and honest with your claim. Don’t try to scam your insurance company for more than you’re owed. Don’t fabricate information.
Obviously, some drivers will be accused of insurance fraud even when they’re making a legitimate claim. Your insurance company may believe you’re lying, for example, when you’re really being honest. In that situation, your best option is to provide as much evidence as possible to your insurance company – including photos and videos. If that doesn’t satisfy your insurance company, then you’ll want to get a free consultation with a lawyer specializing in auto insurance cases.
Another thing to remember is that fraud claims are not technically “lawsuits”. In most states, fraud is a crime processed under unique fraud laws that lead to criminal procedures – not a civil suit. Your insurance company won’t technically sue you – but they may prosecute you for insurance fraud.
Ultimately, it’s highly unlikely for the average driver to be sued by their own insurance company.
Types of Insurance Fraud
Have you committed insurance fraud? Are you worried about whether your actions constitute insurance fraud and a potential lawsuit from your car insurance company? There are two general types of insurance fraud, including:
You purposely cause an accident, damage a vehicle, or fabricate a claim seeking compensation from your insurance company.
You’ve been involved in a legitimate accident, but you’re exaggerating your claim for additional compensation.
Regardless of which type of fraud you’ve committed, you will face significant penalties if you get caught, including financial penalties and legal repercussions.
Your insurance company will keep a close eye on suspicious behavior like frequent claims history, recent financial problems, or adding more coverage to your policy just before a loss.
The Other Driver’s Insurance Company Might Sue You
We’ve established that your own car insurance company is unlikely to sue you unless you’ve committed fraud.
However, the other driver’s insurance company might still choose to sue you. This is far more common than being sued by your own insurance company.
The other driver’s car insurance company might sue you to claim damages. In this situation, you’ll receive a subpoena or a complaint. That document might look frightening. It could have huge dollar amounts and strict deadlines. Instead of immediately paying or stressing, you need to talk to your own insurance company as quickly as possible.
The reason you need to talk to your insurance company is simple: your auto insurance policy almost always includes attorney expenses. That means your insurance company will appoint a lawyer to you without additional cost.
Some drivers may also choose to hire their own independent lawyer. However, in this case, you’ll be paying the lawyer instead of your insurance company.
At this point, your appointed attorney will file an appearance on your behalf. Then, all correspondence between the other insurance company and you will pass through your appointed lawyer.
Ultimately, the majority of auto insurance lawsuits don’t go to trial. They’re settled outside of court. Your insurance company and the other driver’s insurance company will eventually arrive at an agreed amount. This sum might be within your policy limits, in which case you’ll end up paying nothing out of pocket.
Ultimately, suing someone is costly and time consuming. Typically, if a car insurance company believes you’ve provided false information, or if they believe you’ve fabricated a claim, then they’ll just terminate your policy. In some cases, your own car insurance company may sue you – like if your insurer believes you’ve committed insurance fraud. However, lawsuits from your own car insurance company are very rare.
It’s far more likely for the other driver’s car insurance company to sue you. In this case, your car insurance policy usually covers a lawyer’s expenses. Talk to your insurance company and they’ll appoint a lawyer on your behalf.