Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • Most states require car insurance companies to include all licensed drivers in the same household on the policy
  • Many people fear a lawsuit from their insurance company because they believe it could damage their credit rating
  • It is possible to sue your car insurance company if they have not been diligent

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 varied 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.

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.

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What does material misrepresentation 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 individual 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.

Although this is but one example, there are countless numbers of ways that customers can commit material misrepresentation when entering into an insurance contract.

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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 car insurance companies to include all licensed drivers in the same household on the policy or get a written affidavit from those who are not covered stating they have their insurance.

One of the gray areas regarding ineligible drivers is the question of what’s known in the insurance industry as casual drivers. An occasional driver is someone who may drive your car a few times a year.

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 because they believe it could damage their 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 report in full.

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.

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.

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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