Can Someone Sue You after Insurance Pays?

Getting Sued After Insurance Pays Out

Road traffic accidents are a stressful experience. The other car has damage, and they have suffered injuries due to your negligence. Your auto insurance company should pay for their medical bills, loss of income, and car repairs.

Once the insurance claim is over, you can relax, as that is the end of further litigation. Or is it?

Can Someone Sue You after Insurance Pays?
In most cases, yes, but an insurance payout does not prevent a civil lawsuit against you.

You may have heard the statistic that human error is responsible for 94 percent of car crashes. Did you know those car accidents cost Americans $413 billion in 2018? Lawsuits relating to road traffic accidents are one of the most common lawsuits in the United States.

But why would someone want to sue you after they receive an insurance settlement?

When Can Someone Sue You After an Insurance Settlement?
At the point of an insurance settlement, the victim will sign an agreement. Its job is to release all the parties from future litigation related to the accident. This type of agreement is standard in personal injury or road traffic cases. Generally, the victim of a car accident will not file a lawsuit after they agree to a claim settlement. But there are exceptions.

  • The Settlement is Fraudulent. The victim must provide proof beyond reasonable doubt that you acted fraudulently. They must prove that your actions then affected the settlement.
  • The Other Party is Unhappy with the Settlement. In this case, the other party involved may feel the settlement is not enough. They may need more money to pay additional medical bills relating to the accident. Whatever the reason, they can choose to sue for more money.
  • You are an Additional At-Fault Party. When the accident happens, the victim may not be aware of another party's involvement. The information may only come to light following a settlement. In this instance, they may have a case against you as an additional at-fault party.

How Do Car Accident Settlements Work?
There are four steps after a car accident:

  1. Call the Police. If someone has an injury or there is damage to your vehicle, call 911. Your insurance company could ask to see a police report before processing your claim.
  2. Evidence and Documentation. This part is the preparation you do before you file your claim. Take photographs of the cars involved and the damage sustained. In your own words, write down a summary of the accident.

    Get the details of the other driver's insurance company and policy number. You will also need the other party's name, phone number, and make and model of their vehicle.
  3. Call your insurance company. When you have all your documents prepared, call our insurer, and open a new case. You will work with a claim adjuster provided by your insurer. They will help you determine the value of your claim, which considers the cost of repairs to your vehicle.

    A settlement will also include compensation for lost wages and medical expenses.
  4. Claim Settlement and Payout. How long it takes to settle a claim varies by state. Approval of claims is not guaranteed. For example, if there is evidence that you violated state law. Your coverage also has a limit, so your car insurance will only pay out up to your coverage limits.

You may decide not to go down the insurance route and instead sue the other driver. 

Also, before you start this process, check if you are in a no-fault state. If you are, then deciding who was at fault is a non-issue.

What Happens If Someone Sues You After a Car Accident?
A car accident is an unpleasant experience, regardless of who is at fault. But if the other party decides to sue you following the accident, that can be just as stressful.

Most lawsuits involving vehicles settle before trial.

Let's look at each step of the legal process if someone sues you after a car accident.

  • The Victim Files a Lawsuit Against You. The person filing the lawsuit is the "plaintiff." They file a document or a "complaint." The complaint contains their version of what happened during and after the accident. It also includes the claims made against you. You are the "defendant," and you get a copy of the complaint.
  • Your Lawyers Role. Your insurance company provides you with a lawyer. Or you may want to hire one of the many accident attorneys or a personal injury attorney. They file an answer on your behalf. They may also file documents that ask the court to make a preliminary decision on the case. These documents are motions.
  • The Discovery. After your lawyer files the answer, the lawsuit moves into the "discovery" phase. At this stage, each side has a chance to discover more information about the other side's case.
  • Deposition. You may have to answer questions under oath at a deposition. You and your lawyer will sit in a conference room, and the opposing lawyer asks you questions. A court reporter will note down everything.

The good news is that very few lawsuits get to trial. If you are one of the unlucky ones, be ready to testify and possibly pay the plaintiff should you lose.

Being Sued for Car Accident 2 Years Ago
A personal injury claim for a car accident must happen within two years or within the state's statute of limitations. The time starts from the date of the accident.

After the closure of the two-year window, you cannot take the same case to court again. Two years seems like a long time, but courts processes can take time. So, it is worth getting things started as soon as possible.

Can a Lawsuit Be Reopened After Settlement?
No. After agreeing to a settlement, even if the case did not go to trial, you cannot reopen that case again. The legal settlement process is there for the benefit of both parties.

The plaintiff gets money to help pay for medical bills and car repairs. The defendant has protection from any future lawsuits, which means that a legal case cannot open again even if the injuries become more severe than first thought.

Keep in mind that a legal case and an insurance settlement are different. Legal cases cannot be reopened or retried. However, the court system does not handle insurance settlements. Therefore, after an insurer issues a settlement, a victim can retry them in court if a lawyer files a lawsuit for the reasons described above and other acceptable reasons.

Hope that helps!

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At your service,
Young Alfred