Can my car insurance company sue me?

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Here's what you need to know...
  • Car insurance companies typically don’t sue their own customers
  • If you commit insurance fraud, your insurance company can prosecute you in a court of law
  • Another car insurance company could sue you if you are the party at fault in a serious accident

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 car 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 insurance company can’t sue you, there are some instances where you could find yourself in hot water.

Make sure you’re adequately protected. Compare rates and coverage options from several insurers for FREE now!

Why won’t an insurance company sue their own customers?

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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 because they are in the business to make money, and suing someone costs time and money.

Why can’t an insurance company sue you if you commit 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, over 20 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.

There are two types of car 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.

Can another car insurance company sue you for an accident?

https://www.youtube.com/watch?v=7VpbL_sZNq8

The answer is yes.

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 you live in a no-fault state, you probably don’t have to worried 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 car insurance company has your back. Your car 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. If anyone from the opposing side contacts you, do not say anything and refer them to your attorney.

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 can you protect yourself if you are being sued?

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.

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.

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.

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.

Some common car 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

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.

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