After a car accident fault is assigned– this means figuring out who caused the accident. The at-fault driver’s insurance will pay for the injuries and property damage to others up to their policy limit. However sometimes fault isn’t so easily assigned or you may be sued for additional damages by others involved. Luckily less than 10% of car accident cases end up reaching court. Generally these cases are settled out of court.
So if your case is settled out of court will your car insurance rates go up? It actually doesn’t matter if the case is settled in or out of court – it’s more about if you are at fault or not.
You’re at fault.
If you’re at fault it doesn’t matter if you’re sued or not or if the case is settled in or out of court – your rates will go up.
Keep in mind that you will only be covered up until your third party liability limit on your car insurance. We recommend having at least $1 000 000 in coverage but $2 000 000 gives you a lot more coverage for a small increase in price.
Remember that accidents stay on your record for 6 years and you can be sued up to 2 years after the accident occurs.
You’re not at fault.
If you’re not at fault in an accident your car insurance rates should not go up. In fact you would likely be the party suing the other driver for costs relating to injuries or property damage you suffered.
Settling out of court is usually the best option to save on legal expenses.
There is shared fault.
Shared fault (where multiple drivers are assigned fault) can complicate the situation. Generally your insurance rates will go up if you have any fault assigned to you.
Talk to your broker if you’ve been sued after an accident. They’ll be able to advise you on the process and explain how it will impact your car insurance rates.