When you're accused of causing a car accident, and someone else has filed a personal injury lawsuit against you, your car insurance company will usually hire a lawyer to defend your case in court. But there are key exceptions, and it's important to know when you might be responsible for hiring (and paying for) your own attorney.
Most liability car insurance policies contain language stating that the insurer will provide a lawyer for the policyholder if they get into a car accident and they're sued for injuries and other losses ("damages") resulting from the crash. This is part of the insurance's company's contractual "duty to defend," which is an obligation that arises as part of all different types of liability insurance policies.
After all, consumers buy liability insurance to make sure they're not personally on the financial hook if there's an accident involving their property (homeowner's insurance), their small business (commercial liability insurance) or their vehicle (auto insurance).
As with most legal "rules," there are exceptions to the duty to defend. Almost all automobile insurance policies spell out circumstances that will effectively void the insurer's duty to defend the policyholder, including the obligation to provide a lawyer to defend the insured against a civil lawsuit filed by the other driver. Let's look at a few situations in which your car insurance company might not be required to defend you in a car accident case.
If the insured policyholder fails to give the insurer notice of the accident, at least within the time limits specified in the insurance policy, the duty to defend might be voided. This is especially true if the delay has jeopardized the insurance company's ability to properly investigate the accident and/or minimize its losses in connection with the other driver's claim.
You must read your policy carefully for language detailing your duty to notify the insurer after a car accident that could trigger a claim or coverage. That time limit could be as little as 5 or 10 days. If you fail to give your insurer notice of the accident within that time period, and you don't have a good excuse for not contacting an agent, the company may have the right to refuse to provide coverage for the accident. And, by extension, they may refuse to provide you with a lawyer if you get sued over the crash.
What is a good excuse for not giving the insurer notice within the required time period? Generally, if you were seriously injured and in the hospital, or were otherwise physically and/or mentally incapable of notifying the insurer of the accident, that will qualify as an extenuating circumstance excusing your failure to give proper notice.
Don't chance it. If you get into a car accident and you're capable of notifying the insurer, do it that same day, or the next day at the latest. Learn more about contacting your insurance company after a car accident.
If the policyholder is accused of having acted intentionally to cause the car accident, that could also void coverage (and therefore nullify the duty to defend).
Automobile insurance policies generally provide insurance coverage only for negligent actions, not intentional actions. So, if, for whatever reason, the insured is accused of intentionally causing the car accident, there is a very real chance that the insurer will refuse to provide coverage for the accident and will refuse to provide a lawyer to defend the insured in any lawsuit filed over the crash. Learn more about intentional versus negligent acts in personal injury cases.
An example here is a car accident caused by drunk driving. Some car insurance companies argue that drunk driving is intentional conduct on the part of an insured driver, so that if there's a car accident in connection with a DUI, the insurer might refuse coverage of any claim stemming from the crash.
A third important exception to the insurer's duty to provide a lawyer might apply when damages already paid out by the insurer meet your policy's coverage limits. In general, once the insurer has paid the policy limits, it has no further duty toward the insured, meaning:
Let's say you have $100,000 in liability coverage, but you were at fault for a car accident that seriously injured the other driver, so that her damages are well over $100,000. In that case, the insurer will try to settle the case for your policy limits of $100,000, but, if it can't do that, it may be required to simply pay the injured person the policy limits without settling the case. That means the injured person is now free to sue you for the remainder of her damages (not, of course, the $100,000 already received). And if the injured person does sue you, your insurer probably won't provide you with a lawyer, since it's likely no longer under a legal obligation to do so.
It's important to note that the legal duties of an insurance company in this situation may differ from state to state. So, if you're in this situation, it may make sense to talk to a personal injury lawyer on your own.
If you're involved in a car accident and the other driver (and maybe even your own insurance company) says you're at fault, you might find yourself facing a lawsuit. It's one thing for your insurance company not to provide a lawyer to defend you in court, but if the insurer is also arguing that there's no coverage for the accident (for whatever reason), any money the other driver wins in court is going to come from you.
Let's say the other driver sues you in small claims court in Texas, where plaintiffs can seek as much as $20,000 from the person they're suing. The other driver asks for the maximum small claims amount, claiming that their medical bills, lost income, and pain and suffering (taken together, these are all considered "damages" in the language of the law) add up to that much. The judge looks at the evidence of how the crash happened, and the nature and extent of the plaintiff's claimed losses, and agrees that you're liable for the full $20,000. At that point, an enforceable lawsuit "judgment" will be entered against you, and you'll be legally obligated to pay the other driver $20,000 out of your own money. If you don't have that much cash on hand, you might have your wages garnished or face other collection actions.
Of course, if the accident resulted in serious injuries, the other driver could decide to sue you in regular court, where there's usually no cap on how much money they can ask for. If a trial takes place and the judge or jury finds you liable for the car accident, you could find yourself ordered to pay a judgment of six figures or more.
Having a car insurance company deny its duty to defend you is not an identical situation to one in which you're in a car accident and you don't have insurance, but there are more than a few overlapping issues, since personal financial responsibility for losses stemming from the crash can arise in both scenarios. Learn more about what happens if you're in a car accident and you don't have insurance.
It looks like you're responsible for causing a car accident, and you're facing a lawsuit filed by the other driver. But your insurance company is saying it has no obligation to pay for a lawyer to defend you in court. What now? The first step is getting the insurer to declare its basis for this decision, in writing. Once you have an understanding of the insurance company's reasoning, you can decide how to proceed.
If you decide you don't agree with the insurance company's reasoning, and would like them to reconsider their determination that they're under no obligation to defend you in the car accident lawsuit, put your side of the story in writing in a professionally-worded letter or email. Be sure to add as many specifics and details as possible, and ask for clarification of the insurance company's position. For example, if the insurer is arguing that you failed to provide adequate notice of the accident that led to the lawsuit, ask them to explain how that jeopardized their ability to investigate the crash and/or defend the claim.
This can quickly become unsteady territory for insurance companies, since some decisions to deny coverage can amount to "bad faith" on the part of the insurer. It's a fairly rare scenario, but if a separate legal action is started and a "bad faith" finding results, the insurance company will end up paying a lot more than it might have to simply defend you against the other driver's lawsuit. Learn more about "bad faith" car insurance claim denial.
Finally, if for no other reason than to convince the insurance company that you mean business, let them know (firmly but politely) that if they don't reconsider their position, you intend to discuss your options with a car accident lawyer.
Getting your own lawyer involved might prompt some swift reconsideration of their stance. The lawyer might also spot an issue with your accident that you've overlooked, or could devise a strategy that you hadn't considered. As we touched on above, a lawyer might at least get the insurance company to reconsider its position, and decide that defending the lawsuit against you makes more business sense than fighting it out with you and your lawyer.
A lawyer might agree to represent you (and get paid on an hourly basis) for the limited purpose of getting the insurance company to change its mind about its legal obligation to defend you. This might not be the cheapest option, but it might make financial sense if you're facing the prospect of a large court judgment against you. Or, if it turns out you might actually have a valid legal claim against your car insurance company (because of potential "bad faith" denial of the duty to defend, or some other unfair business practice), a car accident lawyer might represent you under a contingency fee arrangement. That means the lawyer only gets paid for their legal services if you receive a favorable outcome (via out of court settlement or court judgment). If you don't receive any money, the lawyer receives no legal fees under a contingency fee agreement.
No matter which angle you're thinking of pursuing in the wake of the insurance company's decision in regard to your car accident, connecting with a car accident lawyer might help you get a sense of your best path forward. Learn more about hiring a lawyer after a car accident.