Will Auto Insurance Cover My Legal Fees?

Last Updated on August 15, 2020

The aftermath of a car accident can result in pricey bills to pay. Not only will you need to pay for medical treatment and to repair your car, but you’ll also need to pay for legal advice if you’re filing a suit against the other party, have been served with a lawsuit, or are disputing the payout from your insurance company. You may be wondering if you can use a car insurance payout to cover your legal fees. Here’s what you need to know about auto insurance and legal payments.

Will Auto Insurance Cover My Legal Fees?

When Will Car Insurance Companies Cover Legal Fees?

Your car insurance company will typically cover your legal fees if you are the one being sued as the result of a car accident. You can find this written into your car insurance policy under a ‘duty to defend’ clause. This money will come out of your liability insurance. Most states require all drivers to have liability insurance. Your liability insurance will also pay for medical bills and property damage for the other party if you are found to be at fault in the accident.

When Won’t Car Insurance Cover Legal Fees?

There are many instances where your car insurance won’t cover your legal fees. The main instance is when you decide to sue the other party as a result of an accident. In this case, you will need to hire your own private lawyer. However, this shouldn’t deter you from filing a lawsuit if you think you have a strong case. If you win your lawsuit, you will likely be able to repay your legal fees using the money you recoup. If you do decide to hire a private lawyer, make sure to negotiate a payment plan ahead of time to account for the delay between the accident and the lawsuit payment. It can often take months or even years before the lawsuit is finally settled.

There are also some instances where your car insurance won’t cover the cost of your legal fees, even if you are the one being sued. The most common example of this is failing to report the accident within a reasonable time frame. Most companies will specify a time period in your contract for you to report any accidents. If you wait until after that time to file a claim, you won’t get access to an insurance-appointed lawyer, and you may not even receive a payout for property damage or medical bills. No matter how bad the accident is, you should always report it to the insurer as soon as possible. This will give them more time to negotiate with the other party’s insurance and will usually lead to a better outcome for you in the long run.

Another instance where you may not receive legal coverage is if you’ve already exceeded your policy’s financial payout limit. Each liability policy comes with a dollar amount attached. If you only have $100,000 of liability coverage, but the other party has $100,000 worth of medical bills, then there won’t be any money left over to cover your legal fees. To prevent this from happening, you’ll want to take out a larger insurance policy than your state requires. It may mean a slightly higher monthly payment, but it can prevent you from having to pay damaging legal fees in the future.

If you get into a car accident on purpose, you also won’t be eligible for legal coverage if you are sued. Most car insurance companies have clauses that state that they won’t pay any damages for intentional accidents. Adjusters will assess all the evidence after the accident to determine how the collision happened and who caused it.

Tips for Working With a Lawyer After a Car Crash

After a car crash, your first thought may not be to seek legal advice right away. When you’re concerned with getting your car fixed and taking care of medical bills, legal advice can fall by the wayside. However, it’s important to talk to a lawyer as soon as you can to see what your legal options are. When the other party in a car crash decides to sue you, make sure to tell your car insurance company right away. They will get you in contact with a lawyer that they trust.

If you think you may have a case to sue the other party in a car accident, talk to a few different lawyers in your city or town. Many lawyers will offer a free consultation, so you can get an opinion on the situation without worrying about your budget. Make sure to look for lawyers who specialize in car accidents and have experience with a case similar to yours. If you don’t feel comfortable with a lawyer for any reason, look for someone else – you need to make sure you can trust them to communicate with the other party from the accident, the insurance company, and the courts in your area. If you do decide to seek legal counsel, make sure to assess the overall costs. Even if you can win a case, it’s not always worth it to do so if the legal fees are particularly high. Many lawyers will offer a delayed payment structure, so you won’t have to pay the majority of your fees until after the settlement comes through. They may also be able to recommend a low-interest loan for legal payments.

When Is Legal Counsel Not Necessary After a Car Accident?

There are some situations where you may not need legal counsel after a car accident. It’s important to consider the overall circumstances of the situation and assess whether or not you can handle the situation with the insurance company on your own.

  • If there were no serious injuries involved, it is very unlikely that you are going to need a lawyer for your car accident. When the injuries are minor, most people will just rely on their liability insurance as well as any health insurance they may have to cover the treatment. However, you should always wait a few days after the crash before making a decision about this – sometimes injuries are not fully present directly after a crash, but become much more visible later on.
  • Another reason that many people seek legal counsel after a car accident is if they have a conflict with their insurance company or the other party’s insurance company. An experienced insurance lawyer can help ensure that you get the payout you deserve for the accident. However, if you and the other party are both happy with your payouts, there is likely no reason to seek legal counsel.
  • It’s also important to consider the amount of money you would be disputing in the lawsuit. If the amount is small enough that it would end up going to small claims court, it’s usually not worth it. In this case, you should save the money you would spend on legal fees for something else.

It can be intimidating to be served with a lawsuit after a car accident. Luckily, if you have liability insurance, your insurer will typically provide you with a lawyer. Be sure to follow your insurance company’s policies to ensure that you aren’t disqualified from coverage.

James Shaffer
James Shaffer James Shaffer is a writer for InsurancePanda.com and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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