If you are sued for a car accident, a creditor can take non-exempt assets such as savings accounts, investment accounts, secondary properties, and wages.
However, you can still protect your assets even after a car accident. Florida law protects your homestead, head of household wages, joint marital property, and multi-member LLCs from collection. Other assets exempt include IRAs, 401(k)s, annuities, and social security income.
If you have minimal insurance coverage or significant unprotected assets, the injured party may decide to sue instead of settling through insurance. They may believe a lawsuit will result in a larger payout. In these cases, defendants with inadequate insurance need a solid asset protection plan to avoid having their assets collected to satisfy a judgment.
Steps to Protect Your Assets After a Car Accident
To protect your assets after a car accident, you should:
- Confirm Insurance Coverage – Discuss with your insurance company whether the damages are covered within your policy limits.
- Identify Exempt Assets – Determine which of your assets are already protected under Florida law.
- Protect Vulnerable Assets – Implement legal strategies to shield assets that are not currently exempt.
- Submit a Financial Affidavit – Show that your assets are difficult to collect, which may encourage a quicker settlement.
The best way to protect your assets from car accident liability is to have adequate insurance coverage, including an umbrella policy. Most car accident claims are settled within the limits of the driver’s insurance because injured parties typically prefer a quick payout rather than lengthy litigation. When a settlement is reached, the insurance company pays the claim, and the driver and car owner are released from personal liability.
Florida Law Offers Strong Protection
Florida statutes and common law provide extensive protections for residents, even if a car accident has already occurred. For example, your homestead, retirement accounts, and wages (if you qualify as head of household) are exempt from creditors.
We help clients throughout Florida.
Our attorneys give customized advice about specific steps to protect your assets from creditors. Our consultations are offered remotely by phone or Zoom.
What Can Someone Sue for in a Car Accident?
In Florida, a car accident victim can sue for:
- Medical Bills – Costs of treatment, hospitalization, and ongoing care.
- Loss of Income – Wages lost due to injuries that prevent work.
- Property Damage – Repair or replacement of damaged property.
Once a judgment is entered, the creditor can use various tools to collect the money owed. These include (1) taking your deposition under oath to uncover details about your assets and financial history and (2) reviewing financial documents such as bank records, tax returns, and wage statements.
Being Sued for More than the Insurance Coverage
If someone sues you for more than your insurance policy limits, you may be personally responsible for the excess amount.
If you cannot pay a car accident lawsuit judgment, the court may garnish your wages, seize assets, or place liens on property. Bankruptcy could discharge certain debts.
Your insurance company will still pay up to the policy limit to reduce the judgment amount. However, with proper asset protection, it becomes difficult for the injured party to collect the remaining balance.
Can You Be Sued Personally?
Yes, you can be sued personally after a car accident, even if you have insurance. Florida law allows the injured person to sue both the at-fault driver and the owner of the at-fault vehicle.
Under Florida Statute 324.021, the car owner’s liability is capped at $600,000. Most car accident cases settle within policy limits, but if they don’t, the case can proceed to a lawsuit and judgment.
Can You Lose Your Home After a Car Accident?
No, you cannot lose your home due to an at-fault car accident in Florida. The Florida homestead exemption protects your primary residence from being taken or sold to satisfy a judgment, even if you lose a car accident lawsuit.
The exemption protects an unlimited amount of home value. The property must be located on up to ½ acre in a city or up to 160 acres in an unincorporated area.
Tenancy by Entireties Protection
If you own your home jointly with your spouse as tenants by the entireties, it receives additional protection. In Florida, jointly owned marital property is protected from creditors pursuing a judgment against only one spouse.
These legal protections ensure that your home remains safe even if you are found liable in a car accident case.
What If You Have No Assets?
If you are being sued for a car accident and have no assets, the victim and their attorney will likely settle within the policy limits.
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 can protect those assets from creditors.
How Long Does Someone Have to Sue You After the Accident?
An injured person has four years after a car accident to sue the at-fault driver or the owner of the at-fault driver’s vehicle. The four-year timeline stems from Section 95.11 of Florida law.
What Can Be Taken in a Car Accident Lawsuit?
If you are being sued for a car accident and lose the case, the lawyer can:
- Garnish a portion of your salary.
- Seize unexempt money in a bank account.
- Levy corporate stock and single-member LLC interests.
- Foreclose non-homestead property.
Writs of garnishment directed against the defendant’s bank accounts and their wages are usually the plaintiff creditor’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 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 the entirety or if the accounts hold money exempt from collection, such as social security, disability, or annuity proceeds.
Filling Out a Financial Affidavit
In Florida, you are not legally required to complete a financial affidavit for your insurance company or the injured party. However, filling out an affidavit can be helpful in many cases, especially if it shows you have limited assets. This information often encourages the plaintiff’s attorney to settle for an amount within your insurance policy limits.
Why a Financial Affidavit Is Requested
After a car accident, the insurance company or the injured party may ask for a financial affidavit to:
- Assess the defendant’s ability to pay a judgment.
- Decide whether to settle within the policy limits or pursue a larger judgment in court.
Filling out the affidavit is usually a good idea. Often, you want 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 at-fault driver review their asset protection situation before submitting an affidavit. An affidavit is signed under oath, and you should not intentionally falsify asset information on the affidavit. You can typically 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 if Your Insurance Pays or Settles the Case?
In most cases, a person cannot sue you after your insurance pays the plaintiff. If the at-fault driver’s insurance company settles with the injured person, the settlement documents will include a release of all claims. A release means that the injured person cannot sue the at-fault driver or the vehicle owner afterward.
About the Author
Gideon Alper is an attorney who specializes in asset protection planning. He graduated with honors from Emory University Law School and has been practicing law for almost 15 years.
Gideon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.
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