You've been sued for causing a car accident. Now what? (A plaintiff's attorney's perspective)
Anyone who has ever been sued will attest that being sued is not a fun experience. More often than not, it is not fun for the person who filed the lawsuit, either.
If you've been sued because of a car accident, there are usually five main reasons why you have been sued: 1) The plaintiff was hurt and/or the accident damaged their vehicle and/or other property; 2) The plaintiff believes you are at fault for the accident; 3) You have a valid car insurance policy that the plaintiff can go after to collect damages for his/her medical bills and his/her pain and suffering; 4) Your car insurance company has confirmed that the accident was your fault but they do not wish to pay the bodily injury settlement amount that the plaintiff is demanding; or 5) All of the above.
The plaintiff - more specifically the plaintiff's attorney - will generally not go after your assets unless your insurance policy is insufficient to compensate them for their injuries and pain and suffering AND you have substantial assets that they can go after. If your only asset is your house, the plaintiff's attorney will only go after it as an absolute last resort. Contrary to popular belief, attorneys have morals. haha. The last thing we want to do is file a motion to force the sale of a defendant's home at the conclusion of a car accident lawsuit and practically cause the defendant and his/her family to become homeless in the process. Do you want to eliminate any possibility of a plaintiff going after your personal assets in the scenario wherein you cause a serious car accident? If so, you should purchase bodily injury liability coverage with a high policy limit on your car insurance policy and on top of that, consider purchasing umbrella coverage on your policy as well.
Or...you can also drive safely and not cause car accidents in the first place :)
But what happens if you are sued because of a car accident?
If you have a valid liability car insurance policy that covers the car accident, your car insurance company will provide you with an attorney to defend both you and your insurance company from the lawsuit.
Yes, you read that correctly. In the event you are sued, the attorney provided to you by your insurance company would represent the interests of both you AND the insurance company. And the reason the attorney also represents your insurance company is because if the plaintiff's attorney wins a favorable judgment against you at trial, your insurance company will likely be on the hook to pay for some or all of that judgment. Which is why the insurance company needs to hire a defense attorney to represent the company for the litigation. However, the insurance company also owes a duty to its insured: you. One of the insurance company's duties to you is to minimize your exposure to an adverse court judgment.
Which is precisely why, under the law, the insurance attorney's duty to the insurance company is LESS IMPORTANT than the duty the attorney owes to YOU, the insured. (Purdy v. Pacific Auto. Ins. Co. (1984) 157 Cal.App.3d 59, 76.)
Moreover, your insurance defense attorney also has an obligation to advise you about the potential consequences of an adverse verdict and attempt to settle the matter to prevent an adverse judgment from being entered against you by a jury. For that reason, your attorney must disclose both to the insurance company and to you all the facts necessary to enable them to make an informed settlement decision. (Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 716).
As the insured and the person who has been sued, YOUR only objective for the lawsuit is to get the lawsuit dismissed or settled without having to go through a trial. However, the insurance company has the dual goals of protecting YOU and protecting their own bottom line by MINIMIZING the amount it is forced to pay to the plaintiff. As a result of the insurance company's dual duties owed to both YOU and to its own bottom line, these dual duties often create a conflict of interest and not surprisingly, many insurance companies will prioritize their own bottom lines over its duties owed to YOU.
In fact, your auto insurance company is not allowed to prioritize its own bottom line over your rights as the insured. There is an "implied covenant of good faith and fair dealing that obligates the insurance company to accept reasonable settlement demands within the policy limits to avoid exposing its insured to liability in excess of the policy limits." (See Comunale v. Traders & Gen. Ins. Co. (1958) 50 Cal. 2d 654, 659.
Furthermore, when the plaintiff makes a settlement demand on your auto insurance company, your auto insurance company's only "permissible consideration in evaluating the reasonableness of the plaintiff's settlement demand is whether, in light of the plaintiff's injuries and the probable liability of the insured, the ultimate judgment rendered by a jury or court is likely to exceed your auto insurance company's settlement offer." (Johansen v. California State Auto. Ass'n Inter-Ins. Bureau (1975) 15 Cal.3d 9, 16.
Because your auto insurance company owes several duties to you and because those duties take priority over the insurance company's own bottom line, there are several situations wherein conflicts of interest can arise for your auto insurance company if a plaintiff sues you as the result of a car accident. We'll discuss those scenarios next.
Examples of When The Insurance Company and the Insurance Attorney Breaches Duties Owed to You, The Insured/Client.
Let's discuss some concrete real-life examples of the conflicts of interest that a car insurance company and insurance company defense attorney can encounter when they defend someone for a car accident lawsuit:
Scenario #1) You are sued for a car accident and there are independent witnesses who have told the police and the insurance companies that YOU were at fault for the accident. There is no doubt that the plaintiff suffered significant injuries that you witnessed with your very own eyes. And even YOUR insurance company acknowledges that the injuries are serious. And also, YOU know for sure that YOU caused the accident and perhaps you even admit this to your insurance company AND to the plaintiff's car insurance company. But despite all that evidence, your insurance company denies fault for the accident and tries to shift the blame onto the plaintiff or onto some other factor or actor. The plaintiff's attorney sues you for the car accident. In this scenario, YOUR insurance company's behavior is the PRIMARY reason for why you have been sued. Your insurance company has arguably breached its duty owed to you by essentially daring the plaintiff to sue you. This scenario is unlikely but sometimes does happen.
Scenario #2) This is the most common scenario. You are sued because your insurance company is unwilling to pay a satisfactory amount of injury compensation to the plaintiff. If the injury claim has gotten to the point wherein your insurance company has offered a settlement amount to the plaintiff, it most likely means that they have acknowledged that YOU were at fault for the accident and that the only other issue is to decide HOW MUCH it wants to pay the plaintiff for their injuries. Let's say that in this scenario, your bodily injury liability policy limit is $50,000. This essentially means that YOU were sued because your insurance company offered the plaintiff far less than $50,000 to settle their injury claim. In this scenario, YOU have every right to ask your insurance company to give you copies of the plaintiff's medical reports and medical bills related to any injuries he/she may have suffered as a result of the accident. And if after reviewing the facts, you learned that the plaintiff was transported to the ER, and/or that he/she suffered a fracture or other serious injuries due to the accident, you have every right to ask your attorney AND ask your insurance company why they haven't offered the full $50,000 to the plaintiff to avoid the lawsuit or to get rid of the lawsuit. And if you ask those questions, your insurance company owes it to you to give honest answers. Your lawyer is required to disclose to you any settlement offers that the Plaintiff or Plaintiff's attorney makes. If he/she does not disclose the Plaintiff's settlement offers to you, the attorney is violating multiple duties owed to you as his/her client. And if your insurance company has told your attorney to keep you in the dark about any details of your case, it is violating its duty owed to you.
Scenario #3) Your lawyer and/or your insurance company tells you NOT to worry about the trial because they're confident that the jury won't give the Plaintiff a large award or a large verdict. This is a HUGE red flag. Any kind of court judgment against YOU is harmful. Having a judgment show up on your record or on your credit report means that future employers, future landlords, real estate agents trying to sell you a house, etc. will know that you were sued and that you lost in court. A court judgment will lower your credit score. It will allow future employers and others to have unfavorable impressions about you - whether fair or unfair- based on the fact that you were sued and that you lost the lawsuit. This could jeopardize your career prospects and more generally, adversely affect your future. It doesn't matter if the judgment is five dollars or if it is five million dollars because the judgment will now be on your record and credit report, regardless of the amount. For many insurance companies and their defense attorneys, it does not matter to them if the Plaintiff wins a judgment against you in court so long as the insurance company and its attorneys can minimize the amount that it pays to the Plaintiff. But if the insurance company lets its concern for its own bottom line (commonly known as GREED) affect its ability to prevent the plaintiff from getting a judgment against you, it is arguably violating its duty to you. Remember that if a lawsuit is dismissed or settled before trial, it does not appear on your permanent record or on your credit report. If the lawsuit is settled before trial, it's as if the lawsuit never happened in the first place.
Scenario #4) Your lawyer tells and/or your insurance company tell you to commit perjury. You commit perjury when you lie under oath or utter a false representation while under oath. This often happens in a deposition setting. Although it doesn't happen often, a judge could imprison you and/or fine you if he/she finds you guilty of committing perjury. For example, if there are independent witnesses and evidence that YOU or YOUR attorney knows will prove that you ran a red light, and your attorney has instructed you to testify that you had a green light, perjuring yourself can cause a jury to have serious doubts about your credibility and it could lead to them increasing its verdict award for the Plaintiff. If your lawyer and/your insurance company instructs you to lie about a material fact of the car accident case, the lawyer and your insurance company is arguably violating its duty to you.
What Happens if Your Insurance Company Has A Reasonable Opportunity to Settle Plaintiff's Injury Demand Before Trial But Doesn't Do So?
If the plaintiff's injuries and pain and suffering are well-documented and sufficiently serious and the plaintiff makes an injury compensation demand that is at or below the policy limits of your insurance policy, your insurance company owes you a duty to meet the Plaintiff's demand if it is reasonable to do so. Otherwise, if your insurance company ignores or downplays evidence of Plaintiff's serious injuries and the detrimental changes to his/her life resulting from those injuries, and the Plaintiff eventually wins a jury verdict/judgment amount that is more than the policy limit of your insurance policy, the insurance company could be liable for the ENTIRE verdict, not just the amount that is within the policy limit. While it is good news that the Defendant won't have to personally pay a multi-million dollar judgment in that scenario, the bad news is that the Defendant will still have a million dollar judgment on his/her record/credit report.
The Bottom Line
Here's the bottom line: If you are sued because of a car accident, you have the right to ask your attorney and ask your insurance company questions about the litigation process. You have the right to demand to see pictures of the damaged vehicles. You have the right to ask your attorney about the plaintiff's injuries. You have the right to demand that your attorney show you the plaintiff's medical records related to the plaintiff's alleged injuries. You have the right to ask your attorney to share the details of all of Plaintiff's settlement offers with you. Most importantly, you have the right to TELL THE TRUTH when you are put under oath, regardless of what your attorney and/or your insurance company tell you to do.
Taking advantage of your right to asks questions of your lawyer and ask questions of your insurance company and taking advantage of your right to see all the evidence that the Plaintiff has provided will put more pressure on your insurance company to settle lawsuits before trial or to pay a reasonable injury settlement to the Plaintiff to ensure that you aren't sued in the first place. As you find out more about the details of the lawsuit against you, it might make it more difficult for your auto insurance company to justify taking the case all the way through trial; especially if the facts show that the insurance company should be paying the Plaintiff much more than it is currently offering.
As the person who has been sued, you should take the proper actions necessary to protect yourself if you suspect that your auto insurance company is prioritizing its own bottom line over your interests.