After a car accident, an attorney for injured person, or their insurance company, often will request that the party at fault complete a financial affidavit or an affidavit of no other insurance or assets.
Should you fill it out?
First of all, no Florida law requires you to submit a financial affidavit after a car accident. If you are at fault in a car accident you may have to decide whether to comply with the request for your financial affidavit or affidavit of insurance.
The injured party’s insurance company has good reasons for requesting that you, the party at fault, provide a financial affidavit or an affidavit of no other insurance. An injured party who suffers medical and other damages as result of a car accident has a choice about how he can recover compensation for his damages. One option is to accept whatever insurance money is payable by your insurance company. If the injured party accepts your insurance payment he will have to release you (the at-fault party) and your insurance carrier from all claims. The other option is to decline your insurance money and instead pursue a civil judgment against you as the at-fault party. The injured party cannot accept an insurance settlement and also sue you personally for damage you caused in a Florida car accident.
If the injured party declines insurance and sues you personally then the injured lawsuit plaintiff may receive from the court a money judgment for the amount of proven damages. The plaintiff then must collect the judgment from your personal assets. Your personal assets are either exempt from collection or non-exempt from collection. The plaintiff cannot collect all or any part of a money judgment from your exempt assets such as your Florida homestead, retirement funds, annuities etc. But, the plaintiff can take from you any non-exempt assets such as money in an individual owned bank account, your automobiles, and your business. The insured party has to make a choice: either accept whatever insurance is available for forego the insurance and take his chances suing you and collecting money from your personal non-exempt assets.
The injured party wants your financial affidavit or an insurance affidavit in order to assess the likelihood of recovering damages from your insurance or from your personal assets. If your financial statement does not show significant amounts of collectible, non-exempt assets then the injured party will likely accept the insurance money from all of your applicable insurance policies and release you from any further personal liability. If your financial statement shows that you own many non-exempt, collectible assets, and your insurance affidavit reveals that your insurance coverage does not cover the amount of the damages sustained from the accident, then the injured party is more likely reject whatever insurance is offered and then sue you personally and attempt to collect money from your personal assets.
Whether or not to fill out the financial affidavit after a car accident in Florida depends on your unique circumstances and your defense strategy. Wealthy individuals who are “deep pocket” defendants have little to gain by furnishing a plaintiff’s attorney with a financial statement. The financial affidavit will increase chances of a personal lawsuit to recover the plaintiff’s damages and provide the plaintiff attorney with a road map to collect a money judgment. On the other hand, voluntarily submitting a financial affidavit carries little risk for someone who knows they own only exempt assets; an example is a retired person living on social security and retirement accounts knows that all their income is exempt from lawsuit collection. Demonstrating that all income and accumulated money is exempt from creditors should quickly convince the injured party to release you personally and accept an insurance payout.
Most people are unsure whether their assets are exempt from collection and whether they are an attractive lawsuit target. Most car accident defendants would benefit from an asset protection review. If an asset protection review shows that you own significant non-exempt assets that are exposed to the injured party then you may take legal steps to better protect these assets before submitting a financial affidavit. There are asset protection strategies after a car accident that are not reversible as fraudulent transfers or fraudulent conversions. The financial affidavit is a static picture of your financial situation after you have taken asset protection remedies. Effective asset protection will make it more likely that a plaintiff injured in a Florida car accident will accept whatever insurance is available and release you from personal liability.
If you would like us to review your assets, please contact us to schedule an appointment.