What Happens If Someone Sues My Insurance Company?

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      What Happens If Someone Sues My Insurance Company?

      What Happens If Someone Sues My Insurance Company?

      We get asked all the time, what should I do if someone sues me for a car accident in Ontario, or what happens if someone sues my insurance company? If you are responsible for another person’s injuries or financial losses, due to carelessness or negligence on your part, that person may bring a claim against you. However, assuming you have automobile or home insurance, that claim would be paid by your insurance company.

      Can an Insurance Company Sue Me?

      When someone sues your insurance that injured party doesn’t actually sue your insurance company by name. They sue you personally and your insurance company responds to the claim on your behalf.

      Notice Letters

      If you injure someone in a car accident, or somebody slips and falls in your icy driveway, you may receive a letter from the injured party notifying you of a claim. This letter may be informal, or it may be a formal letter from the other person’s lawyer, asking you to contact your insurance company. In effect, the injured party or their lawyer is letting you know that your insurance is getting sued or, more accurately, they are going through you to get to your insurance company.

      Working With Your Insurance Company

      When you get sued for a car accident and you have insurance you need to ensure that your insurance company will respond to any claim, you need to contact them right away and fully cooperate with them. If you don’t, then some of the insurance coverage you paid for might not be afforded to you, based on late notice to the insurance company (which denies them the chance to investigate and respond to the claim in a timely fashion).

      In the case of an insurance company that refuses to cover you or covers you for less than the full insurance policy limits, either because you have notified them late, you haven’t notified them at all, or perhaps you knowingly provided them with false information when applying for insurance (known as “material misrepresentation”), you might find yourself partially or fully personally responsible to the injured party for their losses. You don’t want to have to sell your personal assets or refinance your home to pay an injured party’s claim. That is why it is important, to be honest with an insurance company when applying for a new policy and to cooperate with them fully.

      The insurance company will investigate the claim and try to resolve it at an early stage. If the claim is for significant injuries or financial losses, your insurance company may need to hire a lawyer to deal with the case. Either way, you and your personal assets will be protected up to the limits of your policy.

      Most automobile and home policies in Ontario carry $1,000,000 in liability coverage, which is adequate in all but the most serious of cases.

      What to Do if Someone Sues You for a Car Accident in Ontario?

      When someone sues after a car accident, if the claim can’t be resolved by an insurance adjuster at an early stage, you may be served with a Statement of Claim, which is the first step in personal injury litigation. You may wonder why you are named personally in the claim, even though you have insurance coverage. That is because an injured party cannot sue your insurance company directly, since the insurance company didn’t directly cause any injuries and financial losses. Your insurance policy responds to a claim because you purchased that policy for peace of mind in the event that you accidentally injure somebody and get sued as a result.

      If a Claim Proceeds to Litigation

      If somebody hands you a Statement of Claim, don’t panic. Just contact your insurance company, provide them with a copy of the claim and they will handle it. They will hire a lawyer to act for you (although he or she is really acting for your insurance company to ensure it pays as little as possible to resolve the claim). The insurance company’s adjuster or lawyer, or both, may meet with you at various times to discuss what happened to cause the other person’s injury and to explain the litigation process, starting with the Statement of Claim.

      What Happens if Someone Sues You for More Than Your Insurance Company Covers?

      In rare cases, an injured person might claim an amount greater than your insurance policy limits. Say, for example, that you are involved in a car accident where another person is paralyzed and requires considerable medical care, but also loses their ability to work. That person’s claim could be significantly higher than your $1,000,000 liability limits, in which case you should obtain separate legal representation to protect your personal assets. Of note, one way to avoid this unlikely scenario is to pay for extra insurance. You can get $2,000,000 or even $3,000,000 of liability coverage for slightly more than you are paying now. You can even get an excess “umbrella” policy for both your automobile and home which covers you for several million dollars if somebody gets hurt by you in a car accident or on your property. It’s good to speak to a knowledgeable insurance broker about this excess coverage.

      If the litigation proceeds, the lawyer for you and your insurance company will guide you through and prepare you for the later steps of the litigation process:

      1. Examinations for discovery, where you are questioned under oath in a boardroom setting about how the injured party got hurt
      2. Document exchange, where you may have to provide the insurance company’s lawyer with information and documentation relevant to the case
      3. Pre-trial, where the parties meet with a judge to discuss the case and whether it can be resolved (typically you would not be personally involved in this)
      4. Trial, where you would give evidence on the witness stand about the circumstances that started the claim in the first place

      What happens if someone sues your insurance company? Or more accurately, if your insurance is getting sued by using your name? Contact your insurance company promptly, cooperate with them and their lawyer fully, and in the unlikely case where the value of the lawsuit is greater than your policy limits, seek out your own lawyer to protect your personal assets.

      Content Updated: Originally published July 3, 2018


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      Disclaimer: The content of this article is a general guideline made available for educational purposes only and is not intended to be used as legal advice for the reader's specific situation nor in general. By reading our blog and website content, the reader acknowledges the above and understands there is no lawyer-client relationship created between you and Himelfarb Proszanski through this content. To get specific legal advice, we encourage you to book a free consultation with one of our lawyers to clarify the legal aspects of your situation.