Who pays when you sue in a car accident?

Car accidents lead to unexpected expenses that pile up quickly. The financial strain may be significant, from medical bills to lost wages and vehicle repair costs. When someone else’s negligence causes the crash, holding them accountable often becomes the next logical step. A car accident lawyer helps victims understand their rights and navigate the legal process to recover fair compensation.

Multiple parties and factors determine financial responsibility in a car accident lawsuit. Below, we outline the roles of at-fault drivers, insurance companies, and other potentially responsible parties so you will understand how the law addresses these issues. 

Who pays when you sue for a car accident?

• Insurance typically pays first—most lawsuits are covered by the at-fault driver’s auto policy.
• If the driver was working, their employer (e.g., delivery or rideshare company) may be liable.
• Uninsured/underinsured motorist coverage may help if the driver lacks sufficient insurance.
• For crashes caused by road defects, the government may pay, but special rules apply.
• In cases of vehicle defects, the car manufacturer may be financially responsible.
• If the at-fault driver dies or files bankruptcy, claims may still proceed via their insurer or estate.
• In multi-car or shared-fault accidents, compensation is divided by each party’s percentage of fault.

Determining Who Is at Fault in a Car Accident

Before determining who pays, it’s essential to establish who was at fault for the crash. In legal terms, fault means responsibility for causing the accident. Proving fault relies on evidence that a driver or another party acted negligently or violated the law. Some common factors that lead to liability include:

• Reckless driving includes excessive speeding, tailgating, and ignoring traffic signals.
• Distracted driving refers to using a phone, eating, or engaging in any activity that diverts attention from the road.
• Driving under the influence involves operating a vehicle while impaired by drugs or alcohol.
• Violating traffic laws involves running red lights, making illegal turns, or failing to yield.

Neglecting vehicle maintenance may result in faulty brakes, worn tires, and other preventable mechanical problems. For example, if a driver runs a red light and hits another vehicle, that action would likely make them responsible for the resulting damages. Police reports, witness statements, and video footage play integral roles in establishing fault.

However, liability isn’t always straightforward. Some accidents involve multiple responsible parties or factors outside a driver’s control, which may complicate matters. 

The Role of Insurance Companies Following a Car Accident

Most car accident claims are resolved through insurance policies. Auto insurance typically covers costs related to the at-fault driver’s negligence. Depending on the situation, various types of insurance may apply.

Liability Insurance

Liability coverage is the most common type involved in accident cases. It pays for damages caused to another person, including medical expenses, lost wages, and vehicle repairs. For instance, if you were hurt because another driver made an unsafe left turn, their liability insurance usually pays for your damages.

State laws determine the minimum amount of liability coverage drivers must carry. Unfortunately, these minimum requirements often don’t cover all damages, especially if the accident involves significant injuries or multiple parties’ victims. 

Personal Injury Protection (PIP)

Some states mandate PIP coverage, which assists with medical expenses and lost wages regardless of who caused the accident. For instance, if you sustain a broken arm in a rear-end collision, your PIP policy may cover some medical bills initially while the issue of fault is being resolved.

Uninsured and Underinsured Motorist Coverage

Your uninsured motorist (UM) coverage may offer compensation if the at-fault driver lacks insurance. Similarly, underinsured motorist (UIM) coverage is activated when the at-fault driver’s policy limits are insufficient to cover your total damages. 

For instance, if your expenses amount to $50,000 but the at-fault driver’s policy is limited to $25,000, UIM coverage from your policy may help cover that amount gap. 

The Role of Policy Limits

Every insurance policy has limits. Suppose damages exceed the at-fault driver’s coverage. In that case, the injured party may need to explore other options, such as filing lawsuits against additional parties or seeking compensation directly from the at-fault driver’s assets. However, this isn’t always a practical solution.

When Multiple Parties Are at Fault

Some car accidents involve multiple parties sharing responsibility for the incident. For example, several drivers may have contributed to the crash in a multi-car pileup. Insurance companies and courts closely examine the fault percentages assigned to each party when determining who pays.

Comparative Negligence

Many states use comparative negligence laws to allocate liability among several parties. For instance, if Driver A is 80% at fault for colliding with Driver B, Driver A’s insurer would cover 80% of the damages. Meanwhile, Driver B may still be responsible for the remaining 20%.

Joint Liability in Complex Accidents

When companies, employers, or others share liability, financial responsibility is often divided among them. For instance, if a delivery driver causes a crash while on the job, their employer might also be held liable under what’s known as vicarious liability.

This is particularly relevant when commercial vehicles, government entities, or defective equipment contribute to an accident. 

Employers and Commercial Vehicles

When employees cause accidents during work-related tasks, their employers may be liable for any resulting damages. Delivery services, rideshare drivers, and trucking companies are examples of employers who frequently face lawsuits in car accident cases. These companies typically have higher insurance policies, which increases the amount of available compensation.

For instance, if a driver for a package delivery company rear-ends your car while making deliveries, the company may be held accountable for your damages, as the employee was working at the time of the incident crash. 

Rideshare Companies

Ride-share companies like Uber and Lyft follow specific insurance protocols. Their policies often cover accidents caused by their drivers while actively transporting passengers or on the way to pick someone up but may not apply at other times. If you’re injured in an Uber accident, the driver’s insurance and the rideshare company’s policy might play a role in coverage expenses. 

Government Entities and Roadway Hazards

Not all accidents are due to driver error. Poorly maintained roads, missing signs, or hazardous intersections sometimes contribute to collisions. When public roads or government-owned properties cause harm, the government entity responsible for maintenance may share liability.

However, suing government entities involves additional steps and shorter deadlines, making it essential to hire a lawyer experienced in these cases. For example, if a pothole leads to an accident and you’ve gathered evidence showing local officials failed to address the hazard, that forms the basis for your claim. 

Vehicle Defects and Manufacturer Liability

If a car malfunction leads to a crash, the manufacturer or distributor of the vehicle or faulty part may be held responsible. Design flaws, production defects, and insufficient warnings provide valid grounds for filing product liability claims.

For instance, if a vehicle’s brakes fail due to a manufacturing defect and result in a rear-end collision, the manufacturer may be liable for damages. Investigating these claims often necessitates finding mechanical experts to demonstrate the defect’s role in the incident crash. 

What Happens if the At-Fault Driver Doesn’t Have Insurance?

An uninsured driver’s lack of coverage complicates matters but doesn’t necessarily limit your options. If the person responsible lacks insurance, potential compensation may come from:

• Uninsured motorist coverage under your policy.
• The at-fault driver’s personal assets, though this depends on their financial situation.
• Other responsible parties, such as vehicle owners or additional drivers.

Recovering Compensation Through Lawsuits

When insurance falls short or the parties involved dispute liability, filing a lawsuit often becomes necessary. This is a formal means to request compensation for expenses such as medical bills, car repairs, and other losses.

Common Types of Compensation

• Medical Costs: Medical expenses often dominate car accident claims, from emergency care to ongoing treatments. Compensation typically covers current and future treatment needs, whether you’re facing surgeries or physical therapy.
• Lost Wages and Earnings: Many accident victims miss work while recovering. Some may even lose future earning potential if their injuries prevent them from returning to full-time employment. For instance, the claim may include future earnings if a welder sustains a back injury that limits mobility.
• Pain and Suffering: Injuries often entail physical discomfort, ongoing pain, and lifestyle restrictions. Compensation for pain and suffering addresses these less tangible losses.
• Property Damage: Vehicle repairs, totaled cars, and replacement of damaged personal items qualify for property damage compensation.
• Loss of Enjoyment and Relationships: If injuries hinder the victim from enjoying hobbies or strain relationships, non-economic damages may acknowledge those hardships.
• Punitive Damages: Rare but possible, punitive damages seek to punish particularly reckless actions, such as drunk driving or intentional misconduct. 

The Legal Process

A lawsuit begins with filing a complaint detailing your claims and the damages you seek. The defendant responds, typically denying fault. This initiates the discovery phase, during which both sides exchange evidence such as medical records, accident reports, and witness statements. Depositions may also be conducted to collect sworn testimony.

Next, settlement negotiations often occur, with both parties discussing possible resolutions based on the evidence. Most cases settle at this stage, avoiding a trial.

The case proceeds to trial if no agreement is reached, where each side presents evidence and arguments. A judge or jury then determines liability and the amount of compensation. Trials involve opening statements, witness testimony, cross-examinations, and closing arguments. After the trial, either side may file motions or appeals if errors occurred during the case.

Throughout the process, an experienced attorney guides you, negotiates on your behalf, and makes sure that your rights are protected. This helps you achieve a resolution that meets your financial and personal recovery needs.

Statute of Limitations

It’s critical to act swiftly after a car accident because deadlines are in effect. Each state establishes a statute of limitations for filing lawsuits. Failing to meet these deadlines may result in losing your right to seek damages entirely. 

For instance, most states allow two to three years to file personal injury claims but impose shorter windows when government entities are involved.

Frequently Asked Questions About Who Pays When You Sue in a Car Accident

What happens if the at-fault driver files for bankruptcy during the lawsuit?

If the at-fault driver files for bankruptcy, it doesn’t automatically mean you’ll go unpaid. Auto insurance typically covers damages in a car accident lawsuit rather than the driver’s assets. However, ongoing litigation may be paused until the bankruptcy case is resolved. Depending on the situation, you may file claims against additional parties, such as a third party that shares responsibility for the crash, or your uninsured/underinsured motorist coverage may step in.

Who pays if the driver liable for the crash borrowed a friend’s car?

If a driver borrows a car with the owner’s permission, the car owner’s insurance policy typically pays first under a concept known as “permissive use.” This means the auto insurance associated with the vehicle takes responsibility for damages up to the policy limits. If damages exceed those limits, the driver’s auto insurance may cover the remaining amount, depending on their policy.

What happens if the at-fault driver passes away before the lawsuit is resolved?

If the at-fault driver dies before your lawsuit concludes, their estate typically becomes responsible for handling the legal claim. The insurance company representing the deceased driver remains obligated to cover damages within the policy limits. Filing a claim against the estate or resolving matters through the deceased’s insurance is common in such scenarios. However, the process may involve additional legal steps, and working with a lawyer helps you receive a fair resolution. 

Who pays if the accident involves a rental car?

The company’s insurance policy might provide some coverage if the at-fault driver was using a rental car. Many rental agreements include basic liability coverage, but this may not cover all damages. That coverage may assist if the at-fault driver purchased additional coverage through the rental company. Otherwise, the driver’s auto insurance policy would typically pay. Victims may also file claims against any applicable policies they hold, such as uninsured motorist coverage, if necessary.

Why Pursuing Compensation Is Important

Holding the at-fault party accountable isn’t just about recovering expenses. It’s about rebuilding your ability to lead a more comfortable life after disruptions caused by someone else’s actions. Medical care, rental cars, missed paychecks, and emotional tolls all deserve acknowledgment and resolution.

Whether a negligent driver, an employer, a government agency, or another party shares responsibility, knowing who pays establishes the foundation for securing fair compensation. By taking the proper steps and seeking legal guidance, the financial burden left by the accident decreases, allowing you to focus on recovery.

TopDog Law Personal Injury Lawyers assists you in starting the recovery process with their network of experienced local lawyers. Learn more by calling TopDog Law at (888) 778-1197.