The answer to this question is typically yes, your car insurance company will pay for a lawyer to defend you if you're sued after a car accident. But as with most legal issues, there are exceptions. Read on for the details.
In general, all automobile insurance policies contain language stating that the insurer will provide a lawyer for the policyholder if he or she gets into a car accident and is sued for damages resulting from the crash. This is part of the insurance's company's contractual "duty to defend," which can be found in all different types of liability insurance policies.
But most, if not all, automobile insurance policies have exceptions to this obligation. In other words, there are circumstances that will effectively void the insurer's duty to defend the policyholder.
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.
You must read your policy carefully. Somewhere in there will be language detailing your duty to notify the insurer of any accident that could trigger a claim or coverage within a certain time, unless there are extenuating circumstances.
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 car insurance 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.
A third important exception to the insurer’s duty to provide a lawyer may apply when damages paid out by the insurer meet the policy's coverage limits. In general, once the insurer has paid the policy limits, it has no further duty toward the insured -- no duty to pay any further money to resolve claims, and no duty to continue to provide the insured with a lawyer.
Let’s look at a brief example. 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 lawyer on your own.