Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jun 18, 2020

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Here's what you need to know...

  • Auto insurance companies typically don’t sue their own customers
  • If you commit auto insurance fraud, your insurance company can prosecute you in a court of law
  • Another auto insurance company could sue you if you are the party at fault in a serious accident
  • Can an auto insurance company sue me? Typically, they don’t

Can an insurance company sue me? If you are worried that your insurance company might sue you for an accident that you caused, you can rest easy because it’s not going to happen.

As a customer, your auto insurance company is working for you, not against you.

You pay an insurance premium for a reason, and the insurance company is required to compensate for damages up to the limits stated within your policy.

While your auto insurance company won’t file a lawsuit against you, there are some instances where you could find yourself in hot water.

Worried about your own car insurance company suing you? It might be time for a change. Make sure you’re adequately protected. Compare rates and coverage options from several insurers for FREE now.

Will an auto insurance company sue their own customers?

Do insurance companies want to go to court? If an insurance company sued their own customers, it wouldn’t be a good look for their business. After all, what customer would want to work with a company that ends up suing them?

Another reason an insurance company is not going to sue their own customer is that they are in the business to make money, and suing someone costs time and money.

This is pretty true for any type of insurance. So, can a home insurance company sue you? It’s really unlikely. As stated above, insurers aren’t usually in the business of suing their clients.

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Can another auto insurance company sue you for an accident?

Can someone sue you if you have car insurance? The answer is yes. But it’s not quite as cut and dry and depends on where you live.

“A lot of states have caps on the amount that you can recover from a personal injury, especially for things like pain and suffering or punitive damages. Though medical expenses from a car accident can be very high, it’s the pain and suffering compensation or punitive damages that lead to the million dollar type verdicts that make headlines. In states where there’s a cap on that sort of recovery, lawsuits are going to be extremely rare. The issue is often not limited to who is actually responsible but also to whether the cost to litigate is justified. Consider the uninsured/underinsured motorist insurance that most states require you to carry. If you are involved in an accident with an uninsured motorist, your uninsured motorist coverage will kick in. Technically, the insurance company could sue the other driver. It was their fault and they should have paid for your damages and injuries… but realistically, the company will almost never do this because it would cost a lot to pursue in court. Even if it was an easy case to win, there would be some costs, and the ability to actually collect from an uninsured motorist are pretty low.”

-Jeffrey Johnson, Lawyer and legal analyst

What happens when an insurance company sues you? This video from eHowFinance talks a little bit about this scenario.

After you’ve walked away from an accident, the other driver may decide to sue you for damages. Being sued can be scary, especially when the dollar amounts sound high. But there are some important things to know if an insurance company is taking you to court.

If you live in a no-fault state, you probably don’t have to worry about getting sued.

There are 13 no-fault states that either restrict or have limitations on being sued:

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

Another feeling of relief is knowing that your auto insurance company has your back. Your auto insurance company will provide you with an attorney to represent you in a lawsuit.

Contact your insurance company as soon as you receive a subpoena or complaint as there are many time-sensitive dates for replying.

Once your appointed attorney files an appearance on your behalf, all correspondence should go to your attorney’s office. For instance, if State Farm is suing you and anyone from the opposing side contacts you, do not say anything and refer them to your attorney.

What happens if you lose a car accident lawsuit? You will probably be ordered to pay all damages that occurred to other involved vehicles.

Most insurance lawsuits don’t go to trial. They are usually settled outside of court to avoid expensive fees associated with a trial.

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How To Protect Yourself From Being Sued After a Car Accident

Liability insurance is important in protecting yourself from being sued. Most states require liability insurance, although the limits may vary from state to state.

While you have to at least have the minimum state requirements, you may want to look at getting liability coverage with higher limits.

If the person suing you is suing you for more than your liability coverage limits, then you could be responsible for the amount that it exceeds.

Your insurer will only pay out up to the maximum bodily injury liability coverage that you have.

Take New Jersey, for example. Their minimum requirements for liability insurance are 15/30/5, meaning $15,000 bodily injury coverage for each individual with a maximum of $30,000 per accident and $5,000 for property damage.

If you’re involved in a serious accident, there could be a chance that your coverage is not sufficient to cover all the damages you are liable for. Medical bills could easily total more than $15,000 for an individual or $30,000 for a group.

Considering that the average car costs over $20,000, $5,000 coverage is not a lot, especially if the vehicle is totaled.

If the other party’s medical bills totaled $50,000 and your coverage was the minimum $30,000, then you are are responsible for $20,000 out of your pocket.

If you have an insurance subrogation claim against you, it’s best to cooperate with the insurer involved.

That’s why it’s important to evaluate your lifestyle and see what limits of liability are right for you. A good rule of thumb is to opt for liability limits that are at least equal to what you own in assets.

Can you be sued for auto insurance fraud?

Insurance companies don’t sue for fraud; they prosecute. Insurance fraud is a big problem in the United States.

According to the Insurance Research Council, between 15 percent and 17 percent of all bodily injury claims were fraudulent or were suspected to be fraudulent or had a buildup of a claim.

Insurance fraud can be defined as an attempt to trick the insurance company in order for your financial gain.

The Insurance Information Institute explains that there are two types of auto insurance fraud:

  • Hard fraud is when an individual tries to purposely cause an accident and submit an insurance claim for compensation.
  • Soft fraud is when an individual gets into a legitimate accident but tries to exaggerate the claim for financial gain.

Either way, there are substantial penalties for committing insurance fraud, both legally and financially.

Insurance companies also keep a close eye on suspicious behavior, such as:

  • Frequent Claims History
  • Financial Problems
  • Adding More Coverage Just Before a Loss

Just because someone exhibits this kind of behavior does not mean that they are automatically labeled as someone who commits fraud. However, it does give the insurance company reason to be wary of the potential for fraud.

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How can you save money on auto insurance?

Opting for higher limits of liability doesn’t mean you have to break the bank. Auto insurance companies base their premiums on a number of different factors, and those factors may vary from company to company.

That’s why it is important to shop around and compare multiple quotes online to see who offers the best insurance for the price.

Don’t hesitate to ask about discounts. This video from First Quote Insurance talks about some of these.

Some common auto insurance discounts are:

  • Low Annual Mileage Discount
  • Use of Car Discount
  • Combined House Insurance Policy Discount
  • Safe Driver Discount
  • Automatic Withdrawal Discount
  • Good Student Discount

The table below shows just some of the discounts provided by the major insurers in the U.S.

Common Auto Insurance Discounts Offered by Major Companies
CompaniesGreen VehicleForward Collision WarningClaim FreeContinuous CoverageDefensive DriverFederal EmployeeGood StudentHomeownerMembership/GroupMultiple VehiclesSafe Driver
21st Centuryxxxxxxxx
AAAxxxxxxxx
Allstatexxxxxx
American Familyxxxxxx
Ameriprisexxxxxx
Amicaxxxxxxxx
Country Financialxxxxxxx
Esurancexxxxxxxxx
Farmersxxxxxxxxx
Geicoxxxxxxxxx
Liberty Mutualxxxxxxxxx
MetLifexxxxxxxxx
Nationwidexxxxxxxx
Progressivexxxxxxxx
Safe Autoxxxxxxx
Safecoxxxxxxxx
State Farmxxxxxx
The Generalxxxxxx
The Hanoverxxxxxxx
The Hartfordxxxxxxxxxx
Travelersxxxxxxxxx
USAAxxxxx
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It’s good to know that your insurance company can’t sue you, but you do have to be careful in the event that the other insurance company decides to sue you.

Make sure that you are fully covered, so you don’t have to worry about the stress of having to pay out of pocket in a lawsuit.

Frequently Asked Questions: Auto Insurance Lawsuits

Keep reading for some more FAQs regarding auto insurance lawsuits.

Can I be sued after an insurance settlement?

Can someone sue you after insurance pays? Typically, once you take a settlement, you can no longer sue for the same thing you accepted the settlement for. Though they can try and file, it’s likely the judge will throw the claim out.

Can I be personally sued for a car accident?

Yes, if you are at fault in an automobile accident, you can be sued.

Can you sue your own insurance company?

If your insurance company didn’t hold up their end of the terms of your agreement, then you may be able to sue them. You may want to seek counsel to determine whether suing your auto insurance company is a good idea.

Will my insurance company drop me if I sue them?

Generally an insurance company will not drop you if you sue them. Again, it would be a good idea to speak to a lawyer if this occurs.

However, if they have a legitimate reason for denying your claim — and can prove it — you won’t win. It’s best to talk to an attorney about how much you can sue for a car accident.

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