Insurance Coverage in Civil Lawsuits: What’s Covered and What’s Not?

If you find yourself being sued in a civil claim, you might be wondering, “Does insurance cover civil lawsuits?” If someone sues you and you are ordered to pay them, this could set you back financially — and significantly so. It’s possible that you may not even have the amount of money that you are supposed to pay out. In some circumstances, you may have insurance that can help you with the monetary consequences of a civil claim. If you find yourself in this position, you should contact a lawyer right away for assistance. The attorneys at Morgan & Morgan can help you with this. We will review your insurance policies and determine if they provide you with any coverage for a civil claim. Additionally, if you decide to file a civil lawsuit against someone else, we will review your policies to see if attorney fees are covered. Contact Morgan & Morgan today to set up a free consultation.

What Is a Civil Lawsuit?

A civil lawsuit is a non-criminal lawsuit that is set in motion by a person or business allegedly suffering some kind of harm or damage. This civil case occurs when the plaintiff, the party filing the complaint, claims to have been harmed by the defendant, the party defending the complaint and asking the court for relief. The plaintiff may plead for relief in monetary damages or by court order, such as an injunction or a declaration of legal right. 

A civil lawsuit can be expensive, even if you’re the one filing it, so having adequate personal liability coverage as part of your insurance policy is one way to help protect yourself financially.

Some Insurance Policies Cover Civil Claims 

In many cases, the personal liability portion of your insurance policy can help provide financial support for your legal defense in a civil claim, regardless of the outcome of the suit. This includes homeowners’ insurance, auto insurance, condo insurance, and more. 

This insurance liability coverage may also help pay the other party’s medical fees and damages should you find yourself required to pay someone who filed a suit against you.

Homeowners Insurance 

Personal liability coverage is a standard component of most homeowners’ insurance policies. It typically provides you with financial protection against lawsuits filed by others, including legal fees and injury that you may have unintentionally caused another party.
 
Homeowners’ liability coverage typically extends to those living at your house as well. This includes your children and pets. For instance, if your dog bites someone while they are visiting your property, your insurance company might cover the medical expenses for the other party. Similarly, if your child accidentally breaks a neighbor’s window, this could be covered under the property damage portion of your policy.
 
While your insurance policy can provide many benefits, there are some situations where your liability coverage would not apply, such as property damage or injury that result from acts of war or intentional damages. Additionally, your homeowners’ liability coverage does not cover business-related activities. If you run a business out of your home and someone visiting you for business purposes is injured on your property, that would be covered by business insurance.

Auto Insurance 

Most standard auto insurance policies include personal liability coverage. Liability car insurance is part of an auto insurance policy that provides financial protection for a driver who harms someone else or their property while operating a vehicle. Many auto insurance policies can also help cover legal expenses if someone files a lawsuit against you.

This type of policy does not cover damages you or your property may have sustained during a car accident. However, this may be separately covered by other parts of your policy. 
The liability portion of car insurance can include several components, including bodily injury liability and property damage liability. 

• Bodily injury (BI) liability coverage: Bodily injury liability helps cover medical expenses for those involved in the accident, excluding you. This coverage handles medical expenses and lost wages for people in another vehicle if you are at fault for the crash.
• Property damage liability coverage: Property damage liability coverage helps cover the costs of repairing the vehicles of other drivers involved in the accident.

It is possible in many states to purchase auto insurance that has more coverage and will help compensate you for your own property damage and physical injuries should you be involved in an accident. Many people opt-out of this, assuming they won’t ever need it. Having this coverage, in addition to the coverage that the other driver has, could save you from having to file a civil lawsuit in many cases.

What Is Umbrella Insurance?

Umbrella insurance provides additional coverage beyond the liability insurance already in place through your other insurance policies. Umbrella insurance can provide liability coverage for injuries, property damage, some civil lawsuits, and personal liability situations. 
This type of insurance provides coverage for claims that may be excluded by other liability policies, such as libel, slander, and coverage beyond the limits on your other policies. Umbrella insurance is essentially a fail-safe; if you are sued beyond the limits of your other policy, umbrella insurance can help you pay these damages so the other party cannot go after your assets.

Bodily Injury

Umbrella insurance can cover the medical bills for someone you injure through acts of negligence. It also covers pet incidents (dog bites) and car accidents in most cases. 

Libel, Defamation, or Slander

Umbrella insurance often helps you pay damages if you lose a civil suit for libel, defamation, or slander.

Property Damage

Umbrella insurance covers the cost of damage or loss to another person’s tangible property, such as the cost associated with damage if you get into a car accident and the repair costs of the other party’s property exceed your car insurance’s liability limits.

What Umbrella Insurance Does Not Cover

While umbrella insurance is a great policy to have, it doesn’t cover everything. An umbrella policy generally does not provide coverage for the following:

• Damage to your personal property: When you accidentally damage your own stuff, or your car or property is damaged in a car accident that you are responsible for, umbrella insurance won’t help with that. It only kicks in if you’re at fault for damaging other people’s property. 
• Criminal or intentional action: If you hurt someone on purpose or damage their property intentionally, umbrella insurance isn’t going to bail you out. You’ll be paying those medical bills and other expenses out of your own pocket. 
• Damage due to nuclear radiation, war, or terrorism

What Is the Basic Process of a Civil Lawsuit?

Regardless of your insurance policy type, every civil lawsuit begins with the plaintiff filing a complaint with the court. The complaint describes the plaintiff’s damages or injury, explains how the defendant caused the harm, shows that the court has jurisdiction, and asks the court for relief. The process typically involves:

Case Preparation

During this stage, a dispute arises, and the parties gather information and prepare for the possibility of a lawsuit. At this point, you should consider speaking to an experienced attorney. They can assist you with preparing your case and they can also determine if you have any insurance policies that will help you cover any legal fees or damages that might arise from the case.

Negotiations

To avoid the expense and delay of having a trial, judges encourage the litigants to try to reach an agreement to resolve their dispute. The courts encourage the use of mediation, arbitration, and other forms of alternative dispute resolution designed to produce an agreeable outcome without the need for trial or other court proceedings. When you hire an experienced lawyer, they can help you negotiate a fair settlement, either one that you have to pay or one that is being paid to you.

Trial 

If you’re unable to reach an agreement, the case will proceed to trial. During this stage, the judge or jury hears the case. Both parties present their evidence and witnesses. Trials take significantly longer than settling a case, typically cause much more stress than a simple settlement, and are ultimately more expensive. 

What Is the Statute of Limitations for Civil Lawsuits?

The statute of limitations refers to the amount of time you have to file a civil lawsuit. If you are injured in an accident, or someone else is injured due to your actions or negligence, the deadline for the lawsuit varies by state. Typically, personal injury suits must be filed within one to six years, with two or three years being the most common. 

Contact Morgan & Morgan For Help

If you find yourself at either end of a civil lawsuit, it’s understandable that you are worried about the financial consequences. Even if you are the one filing the claim, attorneys cost money. Fortunately, Morgan & Morgan always works on a contingency fee basis, meaning we don’t get paid unless we win or settle your case. It’s normal to ask the question, “Does insurance cover civil lawsuits?” That’s where we come in. If you are being sued in civil court, we can help determine if you have an insurance policy that will cover your legal fees and other expenses related to the claim. Contact Morgan & Morgan today for a free consultation.