It sounds like a nightmare to lose your house in a lawsuit involving a car accident, doesn’t it? Regretfully, there’s a chance that if you’re sued for damages and the court determines that you caused the collision, the damages will surpass the worth of your house. Here we are going to answer a very common question of can I lose my house due to at-fault car accident.
Have you ever pondered, “Can an at-fault auto accident cause me to lose my house?” You are not isolated. Many people who find themselves in a difficult situation after a car accident carry a lot of weight in this concern.
One widespread misunderstanding is that if you are judged to be at blame in a car accident, your house would be instantly threatened. But the truth is a little more complicated. Only in rare situations, as when your liability coverage is insufficient to pay the losses, may your house be in danger.
It is against the law in most places, including California, to drive a vehicle without auto insurance. However, if you do not have liability coverage, you are unable to register your vehicle in the form.
In the event that your coverage or auto insurance has expired or you have fallen behind on your premium payments, the insurers collaborate closely with the Department of Motor Vehicles, or DMV.
Why Do You Need A Liability Insurance
Many people frequently undervalue the advantages of liability insurance. Nevertheless, by offering greater liability coverage than their primary motor insurance would provide, these kinds of coverage shield the at-fault drivers and the accident victims.
If the victim of an accident doesn’t have enough insurance to cover their losses, they can sue the negligent party directly; but, if the victim has liability coverage, the at-fault driver’s insurance company will pay a significant portion of the victim’s damages.
Since the introduction of COVID-19 lockdowns and work-from-home policies, we have witnessed an increase in Palos Verdes Estate vehicle accidents and a decrease in freeway crash cases at our business.
Having more than enough coverage to prevent embarrassment and leverage your own assets, like your home, makes sense because so many accidents happen close to home! The fact that your insurer will pay for defense counsel in the event of an unfavorable event is another advantage of having liability coverage.
Minimum Requirements for California Liability Insurance
There are policy limitations on the total amount of coverage that an individual can purchase when purchasing insurance. Every driver in California is required by law to carry insurance with limits equal to $15,000 for bodily injury per person, $30,000 for each accident, and $5,000 for property damage liability.
At first, this could appear sufficient, but when car accidents happen and the at-fault parties don’t have enough insurance, then something goes wrong.
If there are serious injuries, medical expenses could reach $30,000 or more, and car replacements and repairs often cost far more than $5,000.
Is Auto Insurance Enough to Cover a Liability?
When the victim decides to sue you for the accident, it makes no difference to them whether you have liability insurance or not. Having auto insurance in these situations can cover the losses up to the policy limitations specified in the policy.
You might be looking at a sizable payout depending on the severity of the auto accident, the serious injuries sustained, and the victim’s medical expenses. Liability insurance can assist in defraying those expenses.
Liability insurance, however, could not always be sufficient, in which case the accident victim might pursue your possessions, including your house, to make up for their losses.
The easiest method to end a lawsuit is to reach an out-of-court settlement because settling a sizable personal injury claim if the accident victim takes you to trial carries a significant risk. You may have problems if your motor accident is not adequately covered for your own actions.
If the plaintiff has sufficient proof, they may bring the case to court; if this happens, you would have to pay a sizable settlement if the court finds that the plaintiff has caused damages.
In the event that the compensation exceeds the maximum amount allowed by your policy, you will be responsible for paying out of pocket for the full amount of the damages, including the other driver’s medical costs (accident victim). This can require you to sell your home.
When purchasing insurance, speak with a knowledgeable lawyer rather than an insurance salesperson who will try to upsell you on anything. They will be in a better position to advise you on the many insurance policies you can obtain to protect yourself, including underinsured motorist coverage and collision coverage.
What Assets Can I Lose in a Car Accident Lawsuit?
The opposing party may be able to confiscate your personal assets in order to fulfill the judgment if the court grants the other party an excess verdict and you are unable to pay for it out of pocket. This might apply to autos, real estate holdings, bank accounts, and other priceless possessions. If you don’t have any real assets to meet a judgment in the present, you can even have to give up some of your future commissions, salary, or tax refund payments. This process is called garnishment.
Understanding Damages and Liability Coverage
If you are at fault in an accident, liability insurance is intended to pay for the other party’s medical expenses as well as any property damage. It’s crucial to remember that there is a liability coverage limit on every insurance policy. The most your insurance provider will pay for a single accident is this cap.
Should the damages above your liability coverage, the remaining amount may be your own responsibility. For example, in the event that the damages exceed $100,000 and you have a policy with a $50,000 maximum, you would be liable for the remaining $50,000.
In these situations, the aggrieved party may launch a lawsuit to recover the remaining damages if you are unable to pay out of pocket. Your house is one of the assets they might try to target.
Protecting Your Assets
It’s crucial to make sure your liability coverage equals your net worth in order to safeguard all of your possessions, including your house. Consider getting an umbrella policy if your net worth—which includes the value of your house—significantly surpasses the limits of your coverage. This kind of policy adds an extra degree of protection by delivering coverage over and beyond that of your regular auto insurance policy.
Additionally, homestead rules in some states shield a portion of your equity from creditors. State-by-state variations in the protected amount mean that it might not cover the entire worth of your house.
Are You Fearful of Losing Your Home?
It can be disconcerting to consider losing your house as a result of an at-fault auto accident, but it’s crucial to comprehend the financial and legal dynamics at work. You may protect your assets by making sure your insurance coverage matches your net worth, thinking about getting an umbrella policy, and being aware of the homestead rules in your state.
Do you find yourself wondering, “Can an at-fault car accident cause me to lose my house?” Make an appointment for a consultation with a local legal firm to find out more about your options and rights.
