Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Mar 13, 2019

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Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

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Important facts to know...

  • Always disclose correct information on car insurance applications, as false claims can invalidate your insurance policy
  • Never lie about details of an accident or completely fabricate an accident, as companies can sue for insurance fraud
  • As long as you are always truthful and disclose relevant information, car insurance companies are unlikely to sue their clients anyway

Seeking car insurance is always a smart option. As your car insurance provider is meant to protect you, it can be a very unfortunate scenario when your car insurance provider decides to sue you rather than protect you against other lawsuits.

Although uncommon, car insurance providers can sue their clients in certain situations.

This article will outline circumstances where it is appropriate for a car insurance provider to sue their own client, and also explain why being sued by your car insurance company is a highly unlikely possibility.

If you are seeking better car insurance rates, start comparison shopping by entering your ZIP code above!

Providers Can Sue for False Claims or Failure to Disclose Information

Car insurance providers can sue their clients if said clients provide falsified information on their insurance applications, or if the clients fail to disclose relevant information.

You must include the correct and more up-to-date drivers license numbers, names, and birthdates for the driver/drivers, the correct model number for the insured vehicles, and the correct location for the storing of those vehicles, etc.

Everything that is provided to the car insurance agency must be accurate and all useful information must be disclosed. Refer to your individual car insurance application for requested information.

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Car Insurance Prosecution for Insurance Fraud

The main reason that a car insurance agency will sue clients is usually due to insurance fraud. The Insurance Information Institute defines insurance fraud as when someone either “deliberately fabricates claims or fakes an accident” or “misrepresents the work they do to pay lower premiums for workers compensation.”

In the case of auto insurance fraud, car insurance agencies can sue their own client when said client lies about the specifics of an accident that has occurred, or completely fabricates the occurrence of the accident.

In order to minimize the possibility of this happening, there are a few things you can do when you are involved in an accident:

  • Always have a camera located either in your vehicle or on your person. If you are in an accident, immediately take pictures of all sides of your vehicle, and the vehicle or vehicles involved.
  • As soon as you are able, write down as many detailed notes as you can remember about just before the accident occurred, during the accident, and after the accident. Include seemingly irrelevant details, such as the time of day, weather, and the number of people in each vehicle, etc.
  • Never say that an accident occurred when it did not, never lie about any details of an accident that happened, and always relate facts of the accident as clearly and honestly as possible, even if you are wholly or partly at fault. Your car insurance is there to protect you, but they cannot do so if you deliberately lie to them.

Why You Probably Won’t Be Sued By Your Car Insurance Company

Usually, when you are sued by an insurance company, it is not by your own provider, but the car insurance provider of another person with whom you have had an accident or issue.

Although this article outlines some possible scenarios where you can be sued by your own provider, here are several reasons why your provider might think twice before deciding to take action against a client who they have promised to protect:

Giving Their Company a Bad Reputation

When a company sues someone who is insured, even if they provide the insurance, this is looked upon as unsavory for their overall business image.

If a new driver is deciding which insurance company to choose for the first time, they are unlikely to choose a car insurance provider that has a history of suing their own clients.

The possibility of losing potential clients will make car insurance companies hesitant to pursue a lawsuit against their own clients.

Dealing With a Crime, Not A Lawsuit

Even though an insurance company might think they are filing a lawsuit, they may be starting a criminal procedure, as insurance fraud is often processed as a crime, not a lawsuit.

Takes Time and Money

As is the case with many lawsuits, the suing legal process can be very expensive, especially for a large company. It takes a lot of time and money to undergo a criminal, fraudulent lawsuit.

Most car insurance providers are already busy suing the people who have wronged their clients and don’t want to waste time suing their own. That fact alone may dissuade car insurance providers from suing their clients.

Although there are several cases when a car insurance company can decide to take legal action against their own client, this mostly occurs when the client has done something deliberately negative, such as lying to avoid fault or neglecting to disclose pertinent information.

As long as you always tell your car insurance provider the truth, it is unlikely that you will be sued by them.

If you do not commit insurance fraud, you should feel confident that your car insurance provider will be suing those who hurt you, rather than suing and hurting you.

Either way, if you want to switch car insurance companies and get better rates, start comparison shopping by entering your ZIP code below!

References:

  1. http://www.criminaldefenselawyer.com/crime-penalties/federal/Insurance-Fraud.htm
  2. http://www.investopedia.com/articles/personal-finance/040916/car-insurance-applications-what-if-you-lie.asp
  3. http://www.iii.org/issue-update/insurance-fraud
  4. http://money.usnews.com/money/personal-finance/articles/2013/12/17/7-steps-to-take-after-a-car-accident
  5. http://www.all-about-car-accidents.com/resources/auto-accident/car-accident-claims/how-to-contest-a-drivers-claim-for-a-fraudule