What Happens If You're Sued After a Car Accident?

If you are sued after a car accident, your auto liability coverage generally does two things: it pays for a lawyer to defend you, and it pays damages you are found responsible for, up to your policy limits. The Texas Department of Insurance lists your attorneys' fees if you are sued because of an accident among the things most policies cover. The part that goes wrong is rarely the coverage itself. It is the delay between being served and telling your insurer, and the assumption that the papers can wait.

Your policy usually pays for your defense

People often assume liability coverage only writes a check to the other side. In practice the defense obligation is one of the most valuable parts of the policy, because legal costs on a contested injury claim can be substantial on their own, entirely apart from any settlement or judgment. When you report the lawsuit, your insurer typically assigns and pays for a defense lawyer to represent you in the case.

That lawyer represents you, but the insurer is paying and has its own interest in the outcome. Most of the time those interests line up. They can diverge when the claim is worth more than your limits, which is the situation to watch for.

The first thing to do is tell your insurer

Lawsuits run on court deadlines, and missing a deadline to respond can result in a judgment against you regardless of the merits. Report it immediately, and in the meantime:

• Send your insurer the complete set of papers you were served with, not a summary, and note the date you were served.
• Ask for written confirmation that the insurer is defending the claim and who your assigned attorney is.
• Do not contact the other party or their lawyer directly, and route all communication through your insurer or your assigned attorney.
• Do not give a recorded statement to the other side's insurer or lawyer without talking to your own attorney first.
• Preserve everything you have: photos, the police report, repair estimates, medical records, and any messages about the crash.
• Do not post about the accident or your injuries on social media while the case is open.

Reporting late is the one unforced error that can genuinely cost you coverage. Policies require prompt notice of a claim or suit, and an insurer that learns about a lawsuit close to a deadline has less ability to defend it.

What happens if the claim exceeds your limits

This is the real financial risk, and the Texas Department of Insurance states it directly: if you do not have enough liability coverage to pay for the damages and injuries you cause, you might have to pay the rest out of your own pocket, and the other driver could sue you. Your insurer pays up to your limit. Above that line, exposure is personal, and a judgment can potentially reach your income and assets depending on your state's rules.

If it becomes clear the claim is worth more than your coverage, that is the point to consider hiring your own attorney in addition to the one the insurer provided. The insurer's lawyer is defending the case, but only you have a stake in what happens above your policy limits.

Why state minimum limits are the underlying problem

Most people who face personal exposure after a crash bought the legal minimum without thinking much about it. The Texas Department of Insurance notes that the state requires at least $30,000 of coverage for injuries per person, up to $60,000 per accident, and $25,000 for property damage, and warns that the minimum liability limits might be too low if you cause a multi-vehicle accident or the other driver's car is totaled. Minimums differ by state, but the pattern holds nearly everywhere: they were set to guarantee some recovery for victims, not to protect your assets.

Raising liability limits is typically among the cheaper changes you can make to a policy relative to the risk it removes, and an umbrella policy adds a further layer above your auto and home limits. Neither helps with a lawsuit you are already facing, which is precisely why the decision has to be made in advance.

When to get your own lawyer

The insurer-provided defense is adequate for most ordinary claims. Consider retaining your own counsel when the damages clearly exceed your limits, when your insurer is defending under a reservation of rights, when the insurer denies coverage for the accident entirely, or when the suit alleges conduct your policy may not cover, such as intentional acts. State bar associations run lawyer referral services, and the Texas Department of Insurance points consumers to the State Bar of Texas lawyer referral service and to TexasLawHelp for low-income residents; most states have equivalents.

What not to do

Do not ignore the papers, do not try to settle with the other side yourself, and do not admit fault in writing or in conversation while a case is pending. Do not sign anything from another party's insurer without your attorney reviewing it. And do not assume the lawsuit is baseless and will therefore go away on its own, because a case you never respond to can be decided against you without the merits ever being examined.

The bottom line

A lawsuit after a car accident is what liability coverage was built for. Most policies pay for your legal defense as well as damages up to your limits, so the immediate job is to get the papers to your insurer fast and let the defense start. The exposure that should concern you is anything above your limits, which is a problem solved before a crash rather than after. If the claim looks larger than your coverage, get your own attorney alongside the one your insurer assigns.