What if the Defendant doesn't let the insurance company know about the lawsuit?

It can be problematic if you sue the Defendant and they do not co-operate with their own insurance company. Ideally you want to collect a money judgment against an insurance company and not against an individual. The problem with a judgment against an individual is collecting on it can be very difficult. Individuals often will not pay or do not have the resources to satisfy a judgment, meaning you will have to try to garnish their wages or levy against their bank account to collect on that judgment. Finding the correct bank account and the employer’s information can be difficult, and even then, there are legal limits on how much you can garnish from bank accounts and pay checks. It can be like squeezing blood out of a turnip.

The party that is being sued for a car accident should let their insurance company know about the lawsuit immediately or risk losing some or all of the protection provided in the policy.

With certain exceptions, your personal injury lawyer will likely only name and serve the Defendant as an individual when filing a lawsuit. Service will be made on the Defendant with the expectation that they will forward the lawsuit information to their insurance company. It is expected that the Defendant will provide notice of being served to the car insurance company. This is because car insurance policies include the cost of the insured’s representation by the insurance company for the policy that was issued, so there is no reason for an individual to not utilize this benefit.

Most insurance policies have exceptions to coverage that provide them with an “out” if their insured fails to co-operate or notify them. They can can either: 1.) decline coverage altogether or 2.) reduce the amount of auto insurance coverage available under the policy to the state minimum of $25,000. To use this out, they still must go to court and show three things.

The first is that 1.) there was a material breach of the cooperation clause contained within the insurance policy; 2.) that the insurer suffered substantial prejudice from this breach; and 3.) that the insurer exercised reasonable diligence to get the insured’s co-operation. Roller vs. American Home Insurance Co., 484 S.W.3d 110 (MO. App. W.D. 2015). Whether there was substantial prejudice is a question of fact that is left up to the judge or jury to decide.

Pragmatically it is in your best interest that the Defendant co-operates if you are in an accident. If the insurance company successfully uses this defense, the amount available to recover could be substantially decreased. If the original insurance policy covered $250,000 per accident, the insurance company could use this defense to only pay out $25,000, leaving the plaintiff with a judgment against the individual defendant for the rest. This is not a position you want to find yourself in, as discussed above, because of the difficulty of collecting big money judgments against individuals.

If you were injured in a car accident, please contact Stephen Gerring at The Gerring Law Firm today at (314)-222-0066. You will receive personalized accident representation from someone who has been through a serious accident.