LIKE MOST PEOPLE, I don’t spend a lot of time thinking about my car insurance. And like most people, the only time I do think about insurance is when I need to use it. Four years ago, I was involved in a collision. My car was totaled and my insurance company processed my claim quickly. Because I was deemed to be not at fault by my insurance company, I didn’t have to pay my deductible or any other expense related to the collision. I purchased a used car with the funds from my claim and thought nothing more about it.
Until a year ago.
Sitting at home one day last summer, I heard a knock on my front door. I opened it and saw a young man standing there with a large envelope in his hand. After verifying who I was, he proceeded to hand me a summons. I was being sued by the other person involved in the collision.
I had no idea how to deal with being sued. Fortunately, through a series of friendships developed in the competitive shooting community I’m part of, I was able to talk to someone knowledgeable about auto insurance litigation. I found out my insurer would provide a lawyer to represent me. I also learned several other valuable lessons related to my insurance coverage:
- Keep comprehensive notes about any accident you’re involved in. Get copies of any police reports that were filed. Take photos of any damage that occurred. Spend time writing down the details—weather, road conditions, specific location of the accident—as soon as you can.
- Don’t be in a hurry to throw away any documents you collect. I almost discarded all the records related to my collision just a couple of months before I received the summons. I assumed that since the accident had happened more than two years earlier—and my claims had all been resolved—there was no reason to keep my records. As it turned out, the lawsuit was filed just one month before the three-year statute of limitations expired, so I was glad I had hung on to the documentation.
- If you receive a summons related to a car accident, contact your insurance company immediately. You have a limited number of days to respond to a complaint filed against you, so it’s imperative to get the insurance company involved immediately.
- Be aware of your insurance coverage limits and consider increasing them if you have substantial assets. I was happy to discover I had more bodily injury (BI) liability coverage than the minimum my state requires. Subsequently, it was recommended that I increase my BI coverage to at least $100,000 per person, to adequately protect my financial assets. With a net worth now exceeding $400,000, I’m also considering purchasing a separate umbrella policy to further protect me from any future litigation.
I recently gave my deposition about the accident and the case should go in front of an arbitrator soon. Being sued was both a surprise and a wakeup call. Spending time reviewing insurance policies and contemplating litigation isn’t the way I like to spend my time. But knowing I’ve done what I can to protect my financial future helps me sleep better at night.
Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. Her previous articles include Then and Now, Growing Up (I) and To Buy or Not.
Do you enjoy HumbleDollar? Please support our work with a donation. Want to receive daily email alerts about new articles? Click here. How about getting our weekly newsletter? Sign up now.