Why is My Personal Injury Case Limited by Insurance Coverage?

Another way this question might be asked is, “Why can’t I get a lawyer to take my case when there is no insurance coverage?”  The answer is pretty straightforward.  If there is no insurance coverage, there may be no good way to recover money at end of a lawsuit.

If there is insurance coverage, it is often possible to settle your claims without a lawsuit and protracted litigation.  If there is no such coverage, this is likely not a possibility.  The reason being is that most people that have no insurance have no assets or other financial resources with which to settle a claim.

So you may then ask, “Well, then why can’t I just sue them?”  The answer is that you can sue them.  However, you may have problems getting an attorney to represent you unless you are willing to pay hourly attorney fees and costs.   This means that you will be assuming the full costs of the litigation.  In addition, it means that you will bear the full risks of losing.   If you are willing to assume these risks, you can always find an attorney to help you.  

Most personal injury attorneys will work on a contingency fee basis.  If there is no possibility of recovery at the end of the line, the contingency fee is worth little to the attorney.  As such, the attorney may end up having both worked for free and expended significant costs on the litigation with no possibility of recovery due to the lack of insurance and assets.  As you might imagine, few attorneys are willing to do this except in very rare situations.  

To understand the issue more clearly, you have to understand the difference between winning a lawsuit and collecting on the lawsuit.  If you win a lawsuit, you will get an enforceable judgment.  However, “enforceable” does not necessarily mean enforceable the way you may think.  It just means that you can collect if there is anything to collect against. 

If the person has no insurance and no assets (which you can verify with an asset search), what will you enforce against?  In addition, even if you do get a judgment, the defendant may simply file bankruptcy.  Bankruptcy would apply to your judgment in which case all the attorney fees and costs are lost.  

There is an exception for punitive damages which are not dischargeable in bankruptcy.  However, punitive damages are very rare requiring fairly outrageous behavior.  In the rare case where punitive damages are awarded, then you will likely get paid out over many years as there are limits to the amount that can be garnished each pay period from a defendant assuming the defendant has and keeps a job.  If no, you are back to square one, an uncollectable judgment.

Even in the case of punitive damages, though you have a judgment immune to bankruptcy, it could require a huge amount of effort to enforce the judgment.  For instance, each time the defendant changes jobs, you would have to get a new garnishment order for the new employer.  You would also have to keep an eye on the person to figure if they have acquired new assets against which you could enforce the punitive damages award.  Then you would have to lien those assets and so on.  This could require years of monitoring and efforts for what could be very nominal payments.  Again, most attorneys are simply not willing to take cases on this basis.

In short, though you may have a very good case on liability (responsibility) and you may have suffered significant recoverable damages (injuries), there may be no good way of recovering money through a lawsuit in the absence of insurance.  This is extremely disappointing and unfair to someone that is injured but it is a reality and there is often no way around it.  

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