Can You Sue Someone After Settling With Their Insurance Company?

You’ve been in an accident and filed a claim against the at-fault party’s insurance company. After months of negotiations, you finally reach a settlement agreement – they’ll pay you a lump sum, and in return, you sign a release promising not to sue them for additional compensation later. Case closed, right?

Well, not necessarily.

While settling with an insurance company does bar most future legal action, there are a few rare exceptions where you may still be able to sue after the fact. Keep reading to understand when settling prevents lawsuits, the exceptions, time limits, and how working with a personal injury lawyer can help protect your rights.

When Settling Typically Prevents Future Legal Action

The number one reason insurance companies agree to settlement agreements is to obtain a signed release from further liability. This release is a legally binding contract where you promise not to pursue additional claims against the insurer or their insured in exchange for compensation.

Settlement contracts will contain language stating you accept the payout as “full satisfaction” of any and all accident-related claims. By endorsing that check and signing the release, you waive the legal right to seek more damages – even if your injuries turn out worse than expected.

Harsh? Perhaps. But remember, you’re getting compensation without having to prove fault in court. The insurer must remove liability exposure to agree to any settlement at all.

Rare Exceptions – When You Can Sue After a Settlement

While settlements typically end all claims arising from an accident, there are a few rare exceptions:

Fraud or Coercion

If you can prove the insurer used outright fraud or coercion to force you into accepting an unfair settlement, a judge may void the original release and allow you to sue.

Examples might include:

  • The insurer bribing/threatening you to accept an artificially low settlement
  • The settlement check bouncing after you signed the release

Of course, you’d need solid documentation to back up accusations of fraud or coercion in court. Simply claiming the settlement wasn’t enough won’t cut it.

Additional At-Fault Parties

If another negligent party contributed to the accident, you may still pursue legal action against them even after settling with the first insurer.

For example:

  • You settle with the at-fault driver’s insurer, then discover a product defect also caused the crash
  • A multi-vehicle accident where you settled with one motorist but can still sue the other(s)

This aligns with the idea that a settlement only releases that specific insurer and their insured from liability – not third parties.

Lapsed Insurance Coverage

If it comes to light the at-fault motorist’s policy wasn’t active due to non-payment, their insurer can void any settlement. This revives your ability to sue the now-uninsured driver personally.

Of course, suing an individual is only worthwhile if they have sufficient assets to justify the legal costs. Still, it illustrates the importance of verifying insurance before settling. No coverage = no protection from personal liability.

Not Enough Coverage for Extensive Damages

Settling within policy limits does not prohibit seriously injured victims from suing an at-fault driver personally for damages exceeding those limits.

  • This requires proving extensive harm warranting extra compensation
  • Even then, barriers like legal costs and the defendant’s ability to pay often discourage such lawsuits

The exception aligns with the idea that while an insurer’s duty ends at the policy max, individuals remain liable for damage they cause.

Statute of Limitations

Even if exceptions allowing a post-settlement lawsuit exist, you still must sue within the statute of limitations – typically two to six years depending on the state.

Special circumstances like the defendant leaving town or the victim lacking legal mental capacity can pause the clock, but otherwise, you’ll lose the legal right to sue if that window closes.

Working With a Lawyer

An experienced personal injury lawyer can help protect your rights if questions around suing after settling arise by:

  • Negotiating an appropriate settlement amount accounting for all current + probable future damages
  • Securing policy limit payouts from all relevant insurers prior to signing any releases
  • Drafting customized releases/contracts keeping the door open to sue other negligent parties involved

Reaching a comprehensive settlement with all liable parties from the start minimizes chances and need for further legal action.

Having an expert personal injury advisor on your side throughout the process ensures your interests remain protected.

Key Takeaways

  • Accepting an insurance settlement typically ends your ability to sue related to that accident – the whole point of settlements from the insurer’s side is eliminating further legal liability in exchange for payment.
  • Rare exceptions exist like proving fraud/coercion, involvement of other negligent parties, or lack of coverage – but the bar to overcome settlement-related liability waivers is high.
  • Your best bet is working with an attorney from the start to maximize initial payouts while preserving the right to sue other entities contributing to the incident. Don’t go it alone and risk leaving compensation on the table.

Protect yourself, understand your options, and make informed decisions by consulting a qualified personal injury lawyer before signing any release of claims after an accident. Most offer free initial consultations, so you have nothing to lose.

Disclaimer: This article should not be interpreted as legal advice. Settling injury claims can be complex, so always speak with a licensed attorney regarding your particular situation before making decisions. Laws vary by jurisdiction.