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Can my car insurance company sue me?

As much as it pains us to think about it, it is possible to be sued by car insurance companies. Their reasons for doing so are as various as the companies themselves. Nonetheless, nothing in your car insurance policy exempts you from litigation if your car insurance company believes it has just cause against you.

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There are several reasons why your car insurance company might sue you however, before we get to that it is important to remember you should never try to defend yourself against such lawsuits without proper representation. Always contact an attorney who is experienced in car insurance and traffic law. That attorney will be your best chance of success in defending yourself against any lawsuit filed.

My car insurance company is claiming “material misrepresentation”; what does that mean?

Material misrepresentation is a legal condition in which one party to a contract is not completely honest about his or her situation when entering into that contract. For example, in the state of Ohio it is possible to get an SR-22 bond rather than special insurance if a court imposes an SR-22 restriction on a driver. In such a case, the driver would be required to both inform the insurance company of the bond as well as the specific conditions requiring him to carry the SR-22.

If that driver has an accident and the insurance company discovers he lied about his circumstances when applying for the SR-22 bond, they can then claim material misrepresentation on the part of that driver. If they win, their lawsuit that would mean the driver would have to repay any amount they paid out because of the accident. Although this is but one example, there are countless numbers of ways that customers can commit material misrepresentation when entering into an insurance contract.

Can my car insurance company sue me for ineligible drivers?

Another common motivation for car insurance company suing its customer comes by way of ineligible drivers. By that, we mean licensed drivers living in your household whom you have not added to your policy. Most states require that car insurance companies include all licensed drivers in the same household on the policy, or get a written affidavit from those who are not included stating they have their own insurance. It is the latter condition, which most frequently results in lawsuits.

For example, let’s just say your 30-year-old brother comes to live with you because of financial problems. Rather than include him on your policy and pay higher premiums, you provide a written affidavit stating he has his own insurance policy.

If that’s the truth, and he has an accident while driving your car, his insurance will pay for the damage. If it’s not true, your insurance company may refuse to pay your claim. Their other option is to pay the claim so as not to be sued themselves, then turn around and sue you for reimbursement.

One of the gray areas regarding ineligible drivers is the question of what’s known in the insurance industry as casual drivers. A casual driver is someone who may drive your car a few times a year. If that use is warranted because the person is doing something on your behalf, such as picking up your child from school, your insurance company is more than likely going to pay any accident claims that might arise. However, they suspect the individual is more than a casual driver it is possible you could be sued for reimbursement.

Can a lawsuit damage my credit rating?

Many people fear a lawsuit from their insurance company and the fact that they believe it could damage their credit rating. While a lawsuit is never a good thing, rest assured that a suit alone would have no effect on your credit rating. The only thing you have to worry about is losing the case and then being unable to pay the judgment up front. That could result in a credit agency reporting until you pay the judgment in full.

Also, be aware that the threat to sue is not the same thing as a lawsuit filed in court. Sometimes car insurance companies will issue the threat because they know it will increase their chances of being able to settle out of court. If you are threatened with a civil lawsuit, the first thing you should do is contact a local attorney with experience in such issues. That attorney will be able to advise you as to whether you have anything to be concerned about.

If your car insurance company follows through with their threat, you should retain legal representation. Remember that car insurance companies have an army of lawyers working on their behalf. It would be foolish to attempt to represent yourself unless you’re an expert in the law. Otherwise, an attorney specializing in civil litigation and insurance law is your best bet. Most of them charge by the hour, others charge a flat rate depending on the type of case involved.

Can I sue my car insurance company?

Previously we talked about the idea of material misrepresentation on your part. For the same reason, your car insurance company is required by contract law to do everything within its power to ensure that all claims are properly handled to the best of their ability. This is a concept known as due diligence. If you believe your car insurance company has not done its due diligence in any way, you do have the right to sue.

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