Should You File a Personal Injury Lawsuit Against Someone With No Insurance?

If the party responsible for your injury doesn't have adequate insurance or "deep pockets", filing a lawsuit may be a fruitless effort.

A key consideration in any personal injury lawsuit is whether the person being sued (the defendant) will be able to pay a damages award if the person suing (the plaintiff) wins. If the defendant is not a corporation or a wealthy individual, chances are that the only source of payment for a damages award will be the defendant’s insurance policy -- if there is one. This article discusses suing a defendant with limited insurance and the special case of auto insurance.

Is It Worth It?

For the defendant and the plaintiff, litigation is a stressful experience. It is rarely the case that the plaintiff simply hires a lawyer and the lawyer takes care of the rest. A typical lawsuit will require a lot of input from the plaintiff and the distinct possibility of having his or her character questioned.

If a defendant does not have cash or assets and does not have insurance covering the incident, or only a very limited policy, even an upset plaintiff needs to take a step back and ask him or herself: is suing really worth it? Even if the only goal is to punish the defendant, a lawsuit can be quite punishing and expensive for a plaintiff as well.

The unfortunate reality is that even an excellent personal injury case is worth nothing (in terms of recovering compensation) without a "pot" from which to get money.

The Special Case of Auto Insurance

Because so many personal injuries stem from auto accidents, almost every state requires that automobile owners purchase some sort of auto insurance. Additionally, almost every state requires that insurance companies offer under or uninsured motorist coverage (UIM coverage). Also, about a dozen states have in place what are known as “no fault” laws. The effect of UIM coverage and no fault laws is that the plaintiff’s insurance company reimburses the plaintiff for damages and no lawsuit is necessary or, in some situations, even permitted.

UIM Coverage

UIM coverage will pay the plaintiff’s damages, including lost income, medical bills, auto damage, and pain and suffering, if the defendant responsible for the accident has little or no insurance. If a plaintiff did not clearly reject UIM coverage in writing when he or she purchased auto insurance, UIM will be a part of auto insurance in most states. Note, however, that because it can raise premiums UIM coverage is commonly rejected.

If UIM coverage is in place, it will not matter if the defendant is broke and has no insurance: the plaintiff’s own insurance company will pay the plaintiff’s damages up to the limits of the UIM coverage. In fact, no lawsuit will be necessary, since the defendant does not need to be sued to prove the UIM insurance clause applies. The plaintiff may, however, need to sue or go through arbitration with his or her insurance company if the company disagrees that UIM coverage was triggered by the accident.

"No Fault" Laws

About a dozen states also have in place what are known as "no fault" laws. Under no fault laws, the plaintiff’s insurance company is the one to pay damages from an accident, regardless of whether the defendant has insurance or assets.

The difference between UIM coverage and the coverage under no fault laws (called personal injury protection, or PIP) is that the plaintiff under a no fault law typically is not permitted to sue the defendant for damages, even if the defendant has assets and/or an insurance policy. However, the plaintiff can sue the defendant if the defendant caused the plaintiff serious injuries, such as disfigurement, or if lost wages, medical expenses and other economic damages are over a certain limit. The no fault laws vary from state to state, however, with some states even permitting the plaintiff to sue the defendant regardless of serious injury or damages.

Summing It All Up

If the plaintiff’s injuries are from an auto accident where an uninsured defendant is at fault, the plaintiff may be able to recover directly from his or her insurance company . . . and without a lawsuit against the defendant.

If the injuries are from something other than an auto accident, a plaintiff may need to face the harsh reality that suing a defendant with no assets, insurance or other source of money may simply not be worth it, no matter how negligent the defendant was. Determining sources of recovery can be complicated -- it is usually in a plaintiff’s best interest to hire an attorney or an investigator to find out if suing the defendant is worth it.

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