This has been an interesting week because I received several phone calls from individuals who caused a car accident AND were not properly insured at the time of the car wreck. Now these callers are at risk of a Default Judgment and more. In a nutshell, the problem is that since they did not have valid car insurance at the time of the wreck, at least the following legal effects occur:
- If another driver or their insurance company gets a Judgment against you, there is no one, other than yourself, to pay it;
- If they obtain a Judgment against you, they can garnish your bank accounts and/or your wages directly from your Employer;
- 90 days after the entry of an unsatisfied judgment, your driver’s license can be pulled and this revocation will be honored by other states;
- If you are going to try and defend and any lawsuits that might be filed as a as result of the car wreck, you will be responsible for paying your own attorney fees.
Benefits to Having Insurance
Our automobile insurance provides us with at least two things in every instance:
1) the payment of a claim that is being made against us, up to the maximum of the amount of insurance we purchased and;
2) a defense to any lawsuits that might be filed against us, at the expense of the insurance carrier, as a result of the car wreck.
In regard to the first element, the idea is that if we purchase $50,000 of car insurance through GEICO for example, we don’t have to pay the injured driver any money of our own until that $50,000 is exhausted. Our responsibility is only for the amounts that are $50,001 and up. However, because an insurance carrier has a legal duty to settle a personal injury claim within your policy limits if possible, we have a pretty significant protection to those kind of excess claims. Further, since insurance companies are in the business of making money, they don’t just hand out $50,000 every other minute but rather, they will fight an injury claim with whatever defense they may have and settle it for as little as possible; thereby providing you with another defense to the injured party’s claim.
However, if there is no GEICO, you, and no one else, are responsible for paying the claim(s) from the car wreck, assuming the car wreck was your fault. Yes, you can file Bankruptcy and avoid financial responsibility that way however, not all claims can be bankrupted and your credit will be ruined. Also, Bankruptcy laws only allow you to file Bankruptcy once every seven years.
Second, the insurance policy also provides you with a defense attorney, should a lawsuit be filed against you. When I make a personal injury claim against an at-fault driver, an insurance adjuster will evaluate the strength and weaknesses of my client’s claim and based upon those factors, he or she will make a settlement offer to resolve my client’s injury claim. If we cannot agree on a fair figure, I will file a lawsuit on my client’s behalf against the at-fault driver. When I do that, the insurance carrier will hire a defense attorney, at their expense, to defend the at-fault driver. The at-fault driver is not typically responsible for paying those attorney’s fees.
What’s a Default Judgement?
Let’s use the callers from this week to put these concepts in a practical context. For one of the callers, the insurance company had paid the injured party’s medical bills and the cost of repairing their insured’s vehicle. The insurance company had what is called a Default Judgment against the caller.
The essence of a Default Judgment is that the other party won without having to put their case in front of a jury because the caller failed to file a written Answer to the Plaintiff’s Complaint within twenty days from the time they were served with a Summons.
In other words, if you are ever served with a Summons, you are being sued and need to contact an attorney immediately. Most people think they can wait until a Court date is assigned to do anything and that is a very common, very inaccurate misconception.
In addition, that caller contacted me in response to the fact that her wages were being garnished as a result of this Judgment.
While we could make a Motion, i.e. a request to the Court, to set aside the Default Judgment, the Court is going to want a reasonable explanation as to why the original Summons was just ignored. Also, even if the Judgment is set aside, the caller still needs to defend the underlying case (i.e. the fact that she was negligent and this caused the car wreck).
Unfortunately, she is in a position where she not only has to be able to afford to pay for the legal fees related to raising a late defense but also, she still could be facing a Judgment, by the Judge or a jury, down the road. In this case, I advised the caller that she might want to call the defense attorney and see if his client would be open to a compromise. Since the Judgment was relatively small, I suggested she might if they might be willing to accept 50% of the Judgment as a total and final payment for any amounts owed. As long as she made sure any agreements they reached were clear, in writing and signed by the defense attorney as well, I thought she could probably handle this on her own.
Blocking a Default Judgment
For the other caller, the insurance company had sued him but he had filed an Answer to their Complaint which prevented it from obtaining a Default Judgment against him. However, now, they had served him with a set of Request for Admissions. Request for Admissions are basically a tool used in litigation wherein a party admits the veracity of the statements made unless they file written answers to the contrary before thirty days have passed.
As you can see, while the Default Judgement was blocked, when it comes to litigation there are many more tactics and strategies. The attorney knows you still have to defend the actions and respond to Motions. He/she knows that there’s still more pressure to be applied. Couple that with the fact that the attorney does this every day and fully understands how to use deadlines and trap doors. Their job is to do what it takes to get everything the client deserves. If you were on the other side, you’d expect your attorney to pursue every possible means available. It’s simply how it works.
The Solution
At the end of the day, many of these and similar situations can be avoided. I hope these examples have illustrated why it’s important to maintain your automobile insurance policies. Yes, they can be expensive. However, as the above examples show, even if you think you’re saving by not having insurance, the reality is you’re opening yourself up to significant risks, especially if there’s a Default Judgment. These include garnishments, license forfeiture, and expensive legal fees. Is it really worth the risks?
