Can I Lose My Home in a Car Accident Lawsuit?

Can I Lose My Home in a Car Accident Lawsuit

Getting involved in a lawsuit can be worrying for your financial future. You might be wondering, “Can a car accident make me lose my house?” Well, losing your house because of a car accident lawsuit is a real concern. If you’re in a lawsuit and found guilty of the accident, and the resulting damages are more than your home’s value, it could happen.

If you cause harm to someone in a car accident, they can sue you and potentially take your home. Many people believe that a standard auto insurance policy will cover them in case of a lawsuit. However, the risk of choosing just any insurance with any coverage level is that it might not be enough to protect your house and personal assets.

But don’t worry, it’s crucial to understand that the risk to your home depends on specific circumstances. Your house might be at risk if your liability coverage can’t cover all the damages. This is different from the common misunderstanding that your home is immediately in danger if you’re found at fault in a car accident. To navigate this complex situation, it’s a good idea to speak with an experienced attorney who can help you understand your rights and explore potential solutions.

What to Do After An At-Fault Car Accident

Understanding Liability Coverage and Damages

Liability coverage is the part of your insurance that shields you and your assets when you’re at fault in an accident. In New Jersey, the law mandates car owners to get liability insurance for their vehicles. By law, you must have liability coverage that includes at least $15,000 for one person’s injury or death and $30,000 for two or more people ($15,000/$30,000) resulting from a single accident.

How car accident lawsuits can lead to the loss of your home?

It’s important to know that these are just the minimum legal coverage requirements and might not be enough to safeguard you and your assets if you’re in a fault-based accident. We recommend having liability limits of at least $100,000 for one person and $300,000 for two or more people ($100,000/$300,000). But if you have a family or assets to protect, consider higher liability limits, such as $250,000/$500,000 or a combined single limit of $300,000. With these higher limits, your assets will be better protected if someone files a lawsuit against you, and you can even opt for an excess or umbrella policy for additional coverage, potentially up to $1,000,000 or more.

To understand how this coverage works, let’s consider an example. Imagine you’re driving home from work when you receive a text from your child. Instead of waiting to read it, you take your eyes off the road. Unfortunately, you don’t notice that the traffic ahead has come to a stop. You rear-end the car in front, causing serious injury to its occupant. According to New Jersey law, you’re entirely responsible for hitting the stopped vehicle. The driver in the other car sustains a spinal injury requiring surgery. Despite the surgery, the driver remains permanently disabled and can no longer work. The other driver sues you for damages, and let’s assume you have a liability policy of $100,000/$300,000. What’s your potential liability?

Since there was only one person in the car you struck (the injured driver), you have $100,000 from your insurance to pay for the injuries she’s suing you for. If the other driver declines a $100,000 settlement and takes the case to trial, receiving a $250,000 judgment, you’re responsible for the difference between the jury award and your insurance limit of $100,000. Therefore, you’d owe the other driver $150,000 from your own assets. If you had opted for higher liability limits, like $250,000/$500,000 or a $300,000 combined single limit, you could have covered the other driver’s damages with insurance, rather than having to use your own money and assets.

If you get sued for a car accident and the court rules against you, they might make you sell your home to cover the judgment. This is known as an execution sale. If your home is sold this way, you’ll lose it, and you won’t receive any proceeds from the sale.

What To Do After an At-Fault Car Accident

Following an at-fault car accident, there are specific steps required by the law, regardless of fault and whether it involves injuries or property damage.

Stay at the Scene

All drivers involved must remain at the accident site. If it’s a safety concern, you may need to move the vehicles to a safe location, such as the roadside shoulder.

Call 911

It’s mandatory to report the accident to the police, ensuring a prompt investigation. If there are entrapments or severe injuries, calling 911 is essential to get the necessary assistance.

Check for Injuries

You’re obligated to assist anyone injured in the accident. Engage with all drivers and passengers to assess their condition, as this information is crucial when calling 911. The operator will need this data to dispatch the appropriate emergency services.

Seek Medical Care

Getting a medical checkup for yourself is vital. Some injuries, especially internal ones, may not be immediately apparent, and symptoms could manifest hours or even days later. Additionally, mental health challenges, such as anxiety, depression, and PTSD, can surface after an accident. PTSD affects approximately 39% of car accident victims and can lead to confusion and guilt.

Collect Information

The law requires the exchange of your name, phone number, and insurance details with the other drivers involved, and the same must be provided by them. Gathering this information is crucial for potential legal proceedings and aids your insurance company and attorney in determining fault.

To safeguard your interests, gather more information at the scene. Utilize your smartphone to capture photos and videos, which can serve as valuable evidence. This documentation can help establish critical details, such as skid marks, the position of vehicles, or any issues like malfunctioning traffic lights or road obstacles.

Taking notes is an additional precaution. Accidents can be traumatic, and due to shock or injuries, you may forget important details. Maintaining written notes ensures you have an accurate record, which can be beneficial when dealing with legal matters.

Acquire contact information for any witnesses present at the scene so that your attorney can reach out to them.

Contact Your Insurance Company

Following the accident, it’s necessary to contact your car insurance company. Florida’s no-fault accident law means your insurance covers some or all of your expenses, even if you weren’t at fault.

Call a Car Accident Lawyer

It’s advisable to contact a car accident attorney right from the scene. After an accident, you may not be thinking clearly, especially if you’re in shock. A lawyer can help you understand and comply with the necessary legal steps, as leaving the accident scene before the police arrive can result in charges and fines.

Protecting Your Assets

To safeguard your assets, which may include your home, it’s crucial to make sure that your liability coverage aligns with your total worth. If your net worth, which includes your home’s value, is significantly higher than your coverage limits, think about getting an umbrella policy. This kind of policy extends your standard car insurance coverage, adding an extra layer of protection.

An umbrella policy acts as a financial safety net, stepping in to cover expenses that go beyond your primary insurance limits. It can be a real help in the event of a major accident-related liability, potentially saving your home from being at risk.

Understanding State Homestead Laws

Another important layer of protection involves being aware of and making use of your state’s homestead laws. These laws are specifically created to protect a portion of your home’s equity from creditors, which could safeguard your home in case of legal action.

However, it’s essential to remember that homestead laws differ significantly from one state to another, both in terms of the protections they offer and the amount of home equity they shield. Consulting with a legal professional who specializes in real estate and asset protection can help you navigate the specific laws in your area and maximize the protection they provide.

Maintain a Strong Financial Profile

In addition to insurance and legal safeguards, maintaining a solid financial profile can also be crucial in protecting your home. This involves responsibly managing your credit, avoiding excessive debt, and regularly reviewing your insurance policies to ensure they’re in line with your changing financial situation.

Protecting Yourself After an At-Fault Car Accident

In the unlikely event you’re seeking preventative advice rather than post-accident guidance, here are some actions to avoid after being involved in a crash:

  • Do not admit fault.
  • Do not offer apologies.
  • Do not confess to momentary distractions.
  • Do not state that you never saw the accident coming.
  • Do not mention attempting to slow down, avoid the collision, or suggest that you could have taken different actions.

Think about getting a lawyer to support your case if you face a lawsuit. Following these steps can lower the chances of losing your home in a car accident lawsuit.


In conclusion, a car accident lawsuit itself doesn’t mean losing your home. But if you’re sued for damages and the court awards the plaintiff more than your insurance covers, you may have to pay the difference. Also, if you’re found at fault for an accident, your insurance rates are likely to increase.

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