If I Get in a Car Accident and Someone Sues Me, Can I Lose My House?

Posted on Apr 23, 2015

If you are involved in a car accident, there is always the chance that litigation may result. Here is a look at the circumstances around personal injury lawsuits after a car accident.

When Can I Be Sued?

If you were driving the car and caused the accident, it is possible you can get sued by the other driver or his passengers. The trigger is if you live in a state that mandates no fault insurance or in one without, called a tort state. New Jersey follows the no fault system of when it comes to auto accidents.

Almost all states require a driver to cover at least some insurance. Most people also carry uninsured motorist coverage, usually referred to as UIM.

UIM Coverage and No Fault Insurance States

Because of UIM coverage, the plaintiff, who is the person would bring the suit, is able to get the money directly from his own insurance company. He doesn’t need to bring a lawsuit.

No fault laws in conjunction with UIM coverage means the insurance company of the plaintiff covers his damages, so no lawsuit is required. And in fact, some of these states won’t legally permit a suit.

If you live in a no-fault state, like New Jersey, and have no car insurance, you most likely can’t be named as a defendant in a lawsuit. This is true even if you caused the accident. The exceptions are if the plaintiff’s medical expenses are more than $20,000 or the injuries meet the definition of serious.

In that case, the plaintiff can sue you and you will need to pay the damages. In addition, you will have to hire a lawyer. If the plaintiff wins the case, a judgment will be entered against you.

Tort State

The majority of states don’t have no fault insurance laws. If you live in one of these tort states, you can be sued if you cause an accident and someone is injured. You would be responsible for covering:

  • Lost income
  • Auto damage
  • Medical costs
  • Pain and suffering

If you don’t carry auto liability and get sued, you will be responsible for paying these costs out of your own funds if you lose the court case. If you don’t have the money to pay, the plaintiff has several legal methods of collecting the money. For example, he can arrange to garnish your wages.

No Play, No Pay

There is another set of circumstances that also influences lawsuits in case of a car accident. The situation is referred to as no play, no pay, and it is in effect in 10 states. Currently, these states are Alaska, California, Iowa, Kansas, Louisiana, Michigan, New Jersey, North Dakota, Oklahoma and Oregon.

In these states, if you don’t have insurance but are injured in an accident caused by another driver, you may have only limited ability to get money from him for your medical costs.

The point of view in these states is that you would not have been able to come up with the required compensation if you had caused the accident. Therefore, you don’t have the right to claim benefits when the situation is reversed.

The Importance of Insurance

Beside the obvious fact that carrying insurance reduces the risk of lawsuits, it is also a legal requirement in most states. If you are in an accident, whether you caused it or not, you can be fined thousands of dollars for not having insurance.

Most states will suspend for months or even a year if you are caught without insurance. In some cases, it could result in losing your license altogether.

It’s important to keep your insurance up to date. This gives you peace of mind when you drive, whether you are in an accident or not.

Otterstedt is licensed to write insurance in 39 states. Be sure to speak with us concerning the specific laws about auto accidents in your state.

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