Can Someone Sue You After Insurance Pays?

If you caused an accident and the other party filed a claim against your insurance company, you may have breathed a sigh of relief once your insurer finally agreed to a settlement amount and issued a payment. But then, you received notice via certified mail that the other party now plans to sue you for even more money. You may wonder if there is any weight behind the other driver’s intent, and whether the courts will really allow a lawsuit for a claim that has already been settled. The answer depends.

Agreeing to an Insurance Settlement Typically Prevents Future Legal Action

Typically speaking, when an injured party agrees to accept a settlement, he or she also agrees to release the at-fault party from future liability for damages associated with the accident. In fact, this release from liability is the number one incentive that insurance companies have for offering settlements in the first place, and a major motivation for them to negotiate with injured parties for higher amounts. Without the assurance that the injured party will not sue for more money, few insurance companies, if any, would willingly pay out settlements at all.

Car accident settlement agreements are legally binding for all parties. If a victim signs a settlement agreement and later wants to sue the at-fault party for more compensation, the courts are unlikely to allow it. This is why personal injury attorneys encourage their clients to carefully calculate all past and future expenses that stem from the accident and only to agree to an offer after careful consideration.

Exceptions to the Rule

As with most things in the legal world, there are a few exceptions to the standard rule. If any of these exceptions apply in your situation, the other party may have a case against you. The rare exceptions that allow for a lawsuit after the acceptance of a personal injury settlement include coercion and/or fraud, additional at-fault party and lapsed coverage.

Agreeing to a Settlement Via Fraud or Coercion

The courts are most likely to agree to allow the other party to sue you for additional damages after receiving payment from your insurance company if he or she claims fraud or coercion. Fraud or coercion may occur if you, say, bribe the injured party to accept a settlement but then go back on your deal. The courts may also find you guilty of fraud or coercion if you threaten the other party into accepting a low settlement.

Of course, the other party cannot just say that you committed fraud or coercion. He or she will have to prove it, which may be difficult without documentation. However, if the other party has text messages or emails from you that are clearly threatening in nature, or if he or she has a check from you that bounced once he or she tried to cash it, things are unlikely to work in your favor. In cases such as these, the courts may not only allow the other party to sue you for additional damages but also, you may face criminal charges.

You Are an Additional At-Fault Party

In car accident cases in which multiple parties are at fault, it is common practice for the injured individual to file claims with each at-fault person’s insurance company at once. This ensures that one party does not overpay for a mutual mistake.

However, it can and has happened where the victim does not become aware of a third-party’s involvement until months or even years later, and only after he or she accepts a settlement from one insurance company. If this happens in your case, then the injured individual does have the right to pursue compensation from you or your insurer.

Your Coverage Lapsed

The third most common reason that injured parties file lawsuits after accepting and agreeing to a settlement offer is simply that the at-fault party’s insurance coverage lapsed. If your insurer goes through negotiations, extends an offer and then learns that you have not been paying your monthly premiums, it will not issue the payment. If it does issue a payment and only learns after the fact that you didn’t pay the monthly premium, it can demand repayment from you. Not only that but, because you do not have coverage, the injured party can come after you personally for damages.

Suing When Insurance Is Not Enough

If the injured party sustained extensive injuries in your auto accident, it is very likely that your coverage will not be enough to cover the cost of his or her damages. If this ends up being the case, the injured party has the right to first accept a settlement from your insurance company up to your policy limits and then proceed to file a personal injury lawsuit against you. However, the plaintiff must be able to demonstrate that he or she sustained extensive harm in the accident and that he or she tried to recover the full amount from your insurer before pursuing additional legal action.

Even when extensive damages exist, the injured party may face several barriers to recovery. For instance, if his or her damages are not extensive enough, the judge may throw out the case on the basis of the signed settlement agreement. The judge may also order the plaintiff to pay all the legal fees associated with the action—both his or hers and yours.

Moreover, if you do not have enough money or assets to cover the cost of damages out-of-pocket, there is little the courts can do to make you pay the full amount. In this case, it would not be worth the injured party’s time to pursue a lawsuit against you.

The Statute of Limitations on Car Accident Lawsuits

If an injured party decides to file a lawsuit against you, he or she must do so within the statute of limitations. The statute of limitations on personal injury lawsuits varies from state to state. However, it is typically between two and six years. The majority of states maintain the shorter statute of limitations of two years. A handful maintains a period of five years, while the more lenient states allow accident victims up to six years to file a lawsuit.

The statute of limitations in Utah is four years. The statute of limitations in Texas is a mere two.

Exceptions to the Statute of Limitations

Most states do grant exceptions to the statute of limitations when special circumstances exist. Examples of special circumstances are as follows:

• The defendant (in your case, you) left the state for any length of time after the accident occurred
• The injured party was a minor at the time of the accident
• The other party either was at the time of the accident or became mentally incapacitated

If any of these circumstances exist, the courts may extend the filing deadline for a lawsuit.

The Importance of Working With a Skilled Personal Injury Lawyer

Whether you are the defendant in a personal injury case or the plaintiff, it is crucial that you work with an experienced personal injury attorney. The right lawyer can negotiate on your behalf with the other party and take all the appropriate steps to prevent the need for future legal action. To protect your rights regardless of your role in the accident, contact Fielding Law to discuss your case with a qualified personal injury lawyer today.

Sources: 

AutoInsuranceQuote: https://www.4autoinsurancequote.com/sued-after-insurance-settlement-lawsuit/

AllLaw: https://www.alllaw.com/articles/nolo/personal-injury/deadlines-file-lawsuit.html