What to Do If Someone Sues You for a Car Accident in Florida

Can You Still Protect Your Assets After a Car Accident?

If you’ve been sued for a car accident, you can still protect your assets. In Florida, you can use state exemption laws, including the homestead exemption, head of household exemption, entireties ownership, and charging lien protection, to structure what you own in a way that makes judgment collection tools ineffective.

Can You Lose Your House Due to an At-Fault Car Accident?

In Florida, you cannot lose your house due to an at-fault car accident. The Florida homestead exemption protects the home of the at-fault driver and the owner of the vehicle.

The homestead exemption protects an unlimited amount of value, but it is limited to a house situated on a half-acre lot in a city and 160 acres in an unincorporated county. There may be other exemptions that protect the at-fault driver’s house, including tenants by entireties protection.

How to Protect Your Assets After a Car Accident

Adequate liability insurance, including an umbrella policy, is the best asset protection against car accident liability. In most cases, the injured party’s attorney will settle their claim for an amount within the limits of the defendant’s insurance. The reason is that the plaintiff’s goal is to get the most money for the least amount of effort. They want quick settlements, not protracted litigation. An insurance settlement includes a release of the car driver and owner. The car owner and driver will not have personal liability if the plaintiff’s claim is resolved and paid by insurance.

But sometimes, car accident cases do turn into lawsuits, particularly if the driver carries minimum insurance or the defendant appears to have substantial unprotected assets. When the at-fault driver and car owner maintain an insurance policy with inadequate personal injury limits, the injured person may decide that they can collect more money through litigation and a money judgment than through an insurance settlement.

Defendants with inadequate insurance need properly planned asset protection to avoid collection on a personal judgment and to improve their negotiating position during the settlement process.

To protect your assets after a car accident, you should (1) discuss with the insurance carrier whether the damages will be within your policy limits, (2) determine which asset are already exempt, (3) implement a plan to protect vulnerable assets, and (4) submit a financial affidavit that shows your assets will be difficult to collect.

Florida residents who have been sued after a car accident can take advantage of the many protections provided by Florida statutes and common law even after the accident has occurred.

If You Are Being Sued for a Car Accident, What Can They Take?

If you are successfully sued for a car accident, the judgment holder can potentially take the money in your bank account, corporate stock, single-member LLC interests, non-homestead property, and a portion of your salary.

They can use various tools to find out what assets you have. For example, the creditor may examine nearly all the debtor’s financial documents, including bank records, tax returns, and wage statements. The judgment creditor can take the debtor’s deposition under oath and obtain detailed information about the debtor’s assets and financial history.

Therefore, planning to hide assets from a potential judgment creditor is not a good asset protection plan.

Writs of garnishment directed against the defendant’s bank accounts and their wages are usually the plaintiff’s most effective tool to collect money following a car accident judgment. A judgment creditor may obtain a writ of garnishment from the clerk of court and proceed to serve the writ on the debtor’s bank. Upon receiving the writ of garnishment, a bank will freeze all bank accounts that include the debtor’s name on the account title.

The bank must file a formal response to a writ of garnishment that states how the frozen accounts were titled and how much money was in each of the debtor’s accounts when the bank was served with the garnishment documents. The debtor has an opportunity to dissolve the garnishment freeze if the debtor can show that the money in the bank accounts is exempt from collection under Florida law.

The plaintiff can also garnish wages payable to the judgment debtor. The plaintiff can direct the debtor’s employer to withhold and pay to the plaintiff up to 25% of the debtor’s wages net of tax withholding and other required deductions. Wage garnishments remain in effect continually during the debtor’s employment or until the debt is paid.

Florida law provides debtors with defenses to these creditor collection tools. Debtors who qualify as head of family (also called head of household) under Florida law are usually exempt from wage garnishment.

In addition, wages of a head-of-household deposited into a bank account retain their exempt character for up to six months. A debtor may have other defenses against wage garnishment based upon procedural defects in the creditor’s garnishment.

Bank accounts are exempt from garnishment if owned jointly with the debtor’s non-debtor spouse as tenants by entireties or if the accounts hold money exempt from collection, such as social security, disability, or annuity proceeds.

What Can Someone Sue for in a Car Accident?

A car accident victim can sue for damages caused by the negligent driver or the owner of the vehicle. This includes loss of income, medical bills, and damage to property.

Filling Out a Financial Affidavit

Soon after a car accident, an insurance company may request that an insured defendant fill out a financial affidavit. The plaintiff and insurance company want information about the defendant’s assets to decide if they should settle within insurance policy limits or pursue the defendant for a money judgment.

Florida law does not require you to fill out a financial affidavit after a car accident. That said, sometimes filing out the financial affidavit can help you settle your case. The defendant wants to demonstrate that the collection of a civil judgment would be difficult. In that case, the plaintiff is more likely to settle with the insurance company for an amount within the policy limits.

It is important that the defendant review their asset protection situation before submitting an affidavit. An affidavit is signed under oath, and the defendant does not want to intentionally falsify asset information on the affidavit. The defendant can employ asset protection tools to increase protection first and then send in the affidavit.

The at-fault driver’s best course is to review their asset protection status, fix any issues, and then consider a financial affidavit. A well-planned financial affidavit can increase negotiating leverage, leading to a settlement that avoids a lawsuit.

What Happens When a Car Accident Claim Exceeds Insurance Limits in Florida?

When auto accident damages exceed the driver’s insurance limits by substantial amounts, the plaintiff may elect to turn down a quick insurance settlement and sue the driver. The plaintiff must prove in court the defendant’s liability, and the plaintiff must prove that they suffered damages commensurate with their claim.

Anything is possible in a court of law and jury trial; the jury award may be less, or more, than what the insurance company offers.

When the injured plaintiff chooses to file a suit instead of accepting an insurance settlement, the lawsuit could result in a judgment against the driver and owner for an amount above the insurance policy. In the event of an excess judgment, the insurance provider still pays up to the amount of the policy, and the plaintiff will try to recover the balance of the judgment from the defendant’s personal assets.  

The most likely scenario for a car accident lawsuit is when (1) the insurance policy limit is low compared to the damages incurred and (2) the liable parties (at-fault driver or owner of the vehicle) have a substantial amount of assets at risk of collection.

Being Sued for a Car Accident When You Have No Assets

Lawsuits are expensive and time-consuming. The vast majority of car accident plaintiffs and their lawyers prefer a quick and easy insurance settlement, no matter how small, rather than filing a lengthy, expensive, and risky lawsuit against someone who does not have any assets.

The same applies to people who do have some or even a substantial amount of assets, but who are able to protect those assets from creditors.

Frequently Asked Questions

What assets can a car accident victim go after in Florida?

If a judgment is entered against you, the injured party can pursue assets that are not protected under Florida law. This may include investment accounts, rental properties, and non-exempt personal property.

Will my insurance cover all potential claims?

Not always. Basic auto insurance often falls short in serious accidents. If your policy limits are too low, your personal assets may be exposed to collection once a judgment is entered.

Does Florida homestead law protect my home after an accident?

Yes. If your home qualifies as your Florida homestead, it cannot be forced to sale by a judgment creditor, even if the judgment stems from a car accident.

Should I title my car in someone else’s name for protection?

Transferring car ownership after an accident or in anticipation of a lawsuit can be considered a fraudulent transfer. Courts can reverse the transfer and still allow the creditor to reach the vehicle.

Can a Florida LLC protect my vehicles?

A Florida LLC can provide liability protection for business-owned vehicles, but placing personal-use cars in an LLC can raise tax and legal issues. It’s not a substitute for proper insurance or broader asset protection planning.

How much liability insurance should I carry for protection?

Most asset protection attorneys recommend carrying high-limit liability insurance and an umbrella policy. These policies provide a first line of defense and may prevent a creditor from reaching your personal wealth.

Is a trust helpful for protecting assets after a car accident?

Certain irrevocable trusts and offshore structures may shield assets from future judgments, but they must be established before a claim arises. Once an accident happens, new transfers may not be protected.