Perhaps you were in a motor vehicle accident in which someone sustained injuries or a tenant was injured when she fell in a stairwell of your apartment building. You reported the accident to your insurance company and now you have been served with documents initiating a lawsuit against you. What happens next?
What Happens when you are sued?
The adversarial process is intended to draw out the truth. Parties to a lawsuit present their arguments to an impartial judge or jury who resolves the case by examining the facts, applying the relevant law, and issuing a decision or verdict. In insurance litigation, the plaintiff must prove his or her theory of liability and the amount of damages by a preponderance of evidence, which means that he or she must present more persuasive evidence than the evidence the defendant must present.
After the plaintiff starts the lawsuit by serving a summons and complaint on you and by filing the complaint with the court, you, as the defendant, must answer the complaint within a short time period, either by responding directly to the issues raised in the complaint or by filing a motion to dismiss the claims. It is very important to notify your insurer immediately when you are served with the summons and complaint so that an attorney can prepare the answer or seek dismissal in a timely manner.
In most cases, your insurance company will hire an attorney to represent you and will pay the attorney's fees. The company usually selects your attorney from a group of attorneys who have satisfactorily represented the company's insureds in the past in similar types of cases. Although some of the plaintiff's claims against you, such as intentional acts, may not be covered under your insurance policy, your insurer generally is obligated to pay for your attorney if even one claim is covered. The insurance company may notify you that it is reserving its rights to discontinue paying the attorney or not to pay a judgment against you if your insurance policy does not cover the claims for which you are found liable. In the event of reservation of rights or an outright refusal to defend by the insurer, it becomes imperative that you obtain your own, competent, independent insurance counsel to represent your interests.
It is critical that you cooperate fully with your insurer and the attorney they select for you. Under the terms of most insurance policies, if you do not co-operate with your insurer they will have the right to refuse coverage and will not defend you. Your attorney will discuss the complaint with you to gather information regarding the facts. In addition to preparing the answer, your attorney may determine that a third party is responsible for some or all of the plaintiff's damages and should be joined in the lawsuit. For instance, if you were driving the car that struck the plaintiff's car but your car was struck from behind first and was pushed into the plaintiff's car, the person driving the vehicle that hit you may be at least partially responsible and should be involved in the lawsuit.
After your attorney prepares and files an answer to the issues raised by the plaintiff's complaints, you and the plaintiff-and any other parties-will engage in discovery, a procedure that allows each side to obtain factual evidence concerning the other party's arguments. You may be asked to respond to written questions called interrogatories and your attorney may submit interrogatories to the other parties. Your attorney will work with you to respond to the questions and, if the questions are improper, may choose to object to the question rather than provide a response. The attorneys also usually conduct formal, recorded oral question-and-answer sessions, known as depositions, of the named parties and important witnesses. Again, it is critical that you cooperate fully with your insurer and the attorney they select for you. Your attorney may also retain one or more expert witnesses, paid for by the insurance company, to refute the plaintiff's damage claims or theory about how the accident happened or to explain why a third party is responsible. For example, if the accident occurred because the brakes on your car suddenly failed, an expert may be needed to testify about a faulty design or repair of the brake system.
Most courts establish a timeline during which discovery occurs and set a time for trial. Some states also require that the parties pursue alternative dispute resolution prior to trial to avoid full-fledged litigation. With or without private alternative dispute resolution, most cases do settle prior to their court dates. Your control over the decision to settle or try the case depends on the terms of your insurance policy but ordinarily the insurer may decide to settle even if you oppose settlement and if there is no risk that the judgment may exceed the policy limits, the insurer may decide not to settle.
If the case proceeds to trial, you will be expected to attend the trial, where you will sit with your attorney at the counsel table. During the trial, the parties first present opening statements, and then the plaintiff presents its case by examining witnesses. You may be required to testify as part of the plaintiff's case. The defense may cross-examine these witnesses on their testimony, followed by re-direct examination by the plaintiff if necessary. When the plaintiff rests its case, you have your opportunity to present your version of events, and your attorney offers your side of the case through witness testimony. Throughout the testimony, the parties may object to unfavorable evidence or questions based on the court's rules of evidence. The judge decides whether to sustain (or agree with) the objections or to overrule them and allow the evidence or question. After testimony, both sides present closing arguments and the finder of fact, usually a jury, deliberates and reaches a verdict.
The plaintiff may appeal the verdict if he loses and you may appeal if you lose. The structure for appellate review varies from state to state, but all states have at least one level of appellate review. On appeal, the reviewing court does not hear additional witness testimony and only considers whether the trial court committed a legal error or did not apply the relevant law properly.
Your insurance company will continue to provide an attorney to represent you on appeal. Usually, the same attorney who represented you at trial will handle the appeal but sometimes the insurance company will select a different appellate attorney. Like settlement, your control of the decision to appeal depends on the terms of the insurance contract, but insurance companies ordinarily reserve the right to make the final decision whether to appeal in most circumstances.
When Do You Need to Hire Your Own Attorney?
Although the attorney provided by the insurance company to represent you must represent your interests rather than those of the company, there are circumstances in which you may need or want to hire a separate attorney to represent you. If the plaintiff's claimed damages exceed the limits of your insurance policy or if the plaintiff seeks damages that are not covered under your policy, such as punitive damages (damages that are intended to punish especially bad acts rather than to compensate the plaintiff for his or her injuries) or damages resulting from intentional acts, it may be advisable to retain your own attorney to monitor the case. In addition, if the insurance company denies coverage outright and refuses to provide a defense, you will need to hire an attorney to represent you in the lawsuit. If the insurance company has deliberately failed to deal fairly with you in denying coverage or in failing to settle the case within the policy limits, you may have a claim against them and your attorney can advise you regarding how to proceed.
If you are sued for something that is covered by insurance, your insurance company is contractually obligated to act in your best interest. You generally are entitled to the professional services of an experienced attorney to represent your interests and the attorney will guide you through the process and will serve as a strong advocate for you. The costs involved in most insurance litigation, and any resulting judgment, are fully covered by the insurance company but you should make sure that you understand any exclusions or exceptions.
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