Who To Sue: Driver Or Policyholder?

If you've been in a car accident, you might be wondering whether to sue the other driver or their insurance company. The answer depends on the situation and the state in which the accident occurred. In most cases, you would sue the at-fault driver personally and file a claim with their insurance company, which is legally obligated to indemnify them per the terms of their policy. However, if you've already settled with the insurance company, you may have signed away your right to pursue further legal action.

The injured party can sue the at-fault driver personally

If you've been injured in a car accident, you may be considering your legal options for compensation. In most cases, you cannot sue the insurance company directly. Instead, you will have to pursue legal action against the at-fault driver personally. This is because, when the at-fault driver is insured, their insurance company becomes financially responsible for the claim, up to the limit of the insurance policy.

However, there are instances where the at-fault driver's insurance coverage is insufficient to cover the injured party's losses. In such cases, the injured party can sue the at-fault driver personally to make up the difference. This is especially true if the injured party has suffered catastrophic injuries that will impact their quality of life and result in ongoing care costs. If the responsible driver has the financial resources to cover these losses, a lawsuit may be suggested by the injured party's lawyer.

To file a successful suit against the at-fault driver, the injured party's lawyer must prove several things. First, they must establish that the at-fault driver breached their duty of care by acting negligently and putting the injured party in danger. Second, they must demonstrate that the at-fault driver's negligent actions were the direct cause of the collision. This can be done through evidence such as eyewitness testimony and accident reconstructionist reports. Finally, the lawyer must show that the collision caused the injured party to suffer injuries and/or monetary losses.

It is important to note that the ability to sue the at-fault driver personally may depend on the laws of the state where the accident occurred. For example, some states follow the contributory negligence rule, which means that the injured party cannot be awarded damages if they share any blame for the accident. Other states follow the comparative negligence doctrine, which allows the injured party to sue the at-fault driver even if they were partially at fault, but their recovery will be reduced by their percentage of fault.

The at-fault driver's insurance company becomes financially responsible for the claim

When an accident occurs, the at-fault driver's insurance company becomes financially responsible for the claim. This means that the injured party can open a claim with the at-fault driver's insurance company to obtain compensation. The at-fault driver's insurance company is contractually obligated to pay valid claims up to the limit of the available insurance coverage. This is typically around $30,000, which may be used to cover bodily injury claims. In the event that the at-fault driver does not have insurance, they become personally financially responsible for the injured party's claim.

In some cases, the injured party may find that the at-fault driver's insurance coverage is insufficient to cover their damages. This could be due to limited insurance coverage or no coverage at all. In such situations, the injured party has the right to first accept a settlement from the at-fault driver's insurance company and then pursue a personal injury lawsuit against the at-fault driver for additional damages. However, it is important to note that the release of liability clause in insurance settlements prevents further legal action against the liable party. This clause is included to protect the insurance company from future lawsuits.

To avoid future legal action, the injured party should carefully review the settlement agreement with their personal injury attorney before signing. By signing the settlement agreement, the injured party agrees to no more legal action with the insurance company. However, there are exceptions to this. For example, if the at-fault driver's insurance company acted coercively or fraudulently in handling the claim, the release of liability clause and insurance settlement may be considered invalid, and the injured party may have the right to pursue additional legal action.

It is important to understand that the injured party cannot directly sue the at-fault driver's insurance company, as the insurer has no legal obligation to the injured party. Instead, the insurer's obligation is to their policyholder, who is the at-fault driver. Therefore, any legal action would be directed at the at-fault driver, and the insurance company would provide a lawyer for their defence as per their contractual obligation.

The injured party can accept a settlement and then sue for additional damages

Typically, when an injured party accepts a settlement, they also agree to release the at-fault party from future liability for damages associated with the accident. This release from liability is the primary incentive for insurance companies to offer settlements and negotiate with injured parties for higher amounts. The settlement agreement outlines what damages are covered, and if the settlement covers all the injured party's damages and losses related to the incident, they may not have grounds to sue for additional compensation.

However, there are exceptions that allow for a lawsuit after the acceptance of a settlement. The courts may allow the injured party to sue for additional damages if they can prove fraud, coercion, or bad faith on the part of the defendant. For example, if the injured party was bribed or threatened into accepting a low settlement, or if the defendant went back on their deal. In such cases, the injured party may not only be allowed to sue for additional damages but the defendant may also face criminal charges.

Another exception is if there is an additional at-fault party. In some cases, the injured party may not be aware of the involvement of a second defendant until after they have accepted a settlement from the first defendant's insurance company. In this case, they may still be able to sue the other defendant for additional damages.

A third exception is if the at-fault party's insurance coverage lapsed. If the injured party discovers that the defendant has not been paying their monthly premiums, the insurance company may demand repayment, and the injured party can then pursue the defendant personally for damages.

It is important to note that proving fraud or coercion can be challenging without documentation. However, if the injured party has evidence such as threatening text messages, emails, or a bounced check, they may have a stronger case for suing for additional damages.

Before accepting a settlement, it is crucial to seek legal advice from a personal injury lawyer who can review the terms and advise on whether signing a release of liability would prevent future legal action.

The injured party can turn to their own insurance company for compensation

In the event of a car accident, the injured party has a claim against the at-fault driver personally for the harm caused. However, when the at-fault driver is covered by motor vehicle insurance, the insurance company becomes financially responsible for the claim up to the limit of insurance available on the policy. This allows the injured party to open a claim with the at-fault driver's insurance company to obtain compensation.

It is important to note that the injured party must first obtain a court judgment against the at-fault driver to make them legally responsible for the damages caused in the collision. To obtain a judgment, the injured party must file a lawsuit naming the at-fault driver as the defendant and prove their fault in the accident. This lawsuit is filed against the at-fault driver personally, so the injured party cannot directly sue the insurance company. However, the insurance company is responsible for hiring a lawyer to defend the insured driver in the lawsuit.

Additionally, it is worth mentioning that the courts may allow the injured party to sue the at-fault driver for additional damages after receiving payment from their insurance company if fraud or coercion is claimed. For example, if the at-fault driver bribed the injured party to accept a settlement and then went back on their deal, this could be considered fraud. In such cases, the injured party may have a stronger case for seeking additional compensation from the at-fault driver directly, rather than relying solely on insurance coverage.

The injured party can sue the at-fault driver's insurance company if they acted coercively or fraudulently

In the event of a car accident, the injured party has a claim against the at-fault driver personally for the harm caused. However, when the at-fault driver is insured, the insurance company becomes financially responsible for the claim up to the limit of the insurance available on the policy. This allows the injured party to open a claim with the at-fault driver's insurance company to obtain compensation.

In most cases, insurance settlements are permanent and preclude additional legal action unless exceptions or extraordinary circumstances exist. However, if the insurance company or liable party acted coercively or fraudulently in handling your claim, your release of liability clause and insurance settlement might be considered invalid, and you may still have the right to pursue legal action against the liable party and their insurer.

If the insurance company commits fraud or acts in bad faith, you may file a claim or lawsuit against the offending insurer. Insurance fraud occurs when an insurance company intentionally hides or misrepresents facts from policyholders, defrauding them in the process. An insurer may engage in fraud primarily to avoid making large payouts. Bad faith, on the other hand, involves insurance companies failing to meet contractual obligations or misleading individuals to avoid paying out insurance claims. As a result, a victim of bad faith insurance can lose out on compensation, even with a valid claim.

To successfully file an insurance fraud or bad faith claim, it is essential to review the terms of your policy, gather evidence, and consult an experienced attorney. An attorney can help you understand your legal options and protect your rights.

Frequently asked questions