Suppose you’ve been involved in a car accident, a pretty severe one, and the other driver sustained life-altering injuries (or worse). Now imagine the accident was 100% your fault. Obviously, you’d probably feel horrible about it. In the meantime, you’re waiting for the impending lawsuit to come, and you are thinking, “Can I lose my house due to this car accident that’s my fault?’
This is a common concern of at-fault drivers whose negligence, even when not intentional, has caused great bodily harm to the driver or their occupants, or worse, a fatality occurred. Will your car insurance policy cover all of the damages?
Understanding Liability, Comparative Fault, and Insurance Coverage in Indiana
To understand if you could lose your house due to an accident that is your fault, you’ll first need to know how liability, comparative fault, and insurance coverage work in Indiana. Your insurance policy will significantly affect how damages are paid to the plaintiff in a car accident, as will your percentage of responsibility in the crash.
Unlike other states that adhere to no-fault laws, Indiana isn’t one of them. As a no-fault state, the negligent driver in the accident is held liable for damages. However, Indiana follows a modified comparative fault system, which can affect liability and how damages are paid.
Liability and Comparative Fault
Modified comparative fault, known in Indiana as the 51% Bar Rule, states that if a party in a car accident is 51% responsible for its cause, they are ineligible to seek compensation for damages. However, if they’re found to be less than half responsible, they can seek compensation, but it’ll be reduced by the percentage they are liable for.
For example, if a party is found to be 25% responsible for the crash, the compensation they can receive for damages is reduced by that percentage. If they’re awarded $100,000 in damages but are 25% liable, they’ll receive $75,000.
The factors that influence the liability of each driver are:
- Police accident reports
- Photos of the scene of the accident
- Eyewitness statements
- Testimony from accident reconstruction experts
Car Insurance in Indiana
Assuming that you are 100% at fault for the accident, your car insurance policy will determine if you are at risk of losing your home. Depending on the severity of the accident and the injuries sustained by the other driver, your vehicle’s insurance policy can make or break you. Unfortunately, many Hoosiers only carry minimum coverage, which is as follows:
Bodily Injury Liability (BI):
- $25,000 per person injured in an accident
- $50,000 total for all injuries in an accident
Property Damage Liability (PD):
- $25,000 per accident for damage to others’ property
Higher coverage amounts are possible but aren’t required by Indiana law.
Personal Liability for Damages Exceeding Coverage
Depending on the amount of car insurance coverage you have will determine if you will be liable for paying any damages out of your own pocket. Sometimes, minimum liability coverage won’t be enough for a catastrophic car accident to cover all the damages sought.
If you’re found to be liable for the accident, and the plaintiff is awarded damages that exceed your car insurance coverage, they could sue you for the remaining amount. If they win the case, the court can hold you liable for excess damages your insurance policy didn’t cover. The injured party can take legal action to collect the judgment. This can include:
- Garnishment of wages
- Placing liens on property
- Seizing assets
This means that your bank accounts, investments, and possibly even your home may be at risk of being seized to pay the additional damages your vehicle’s insurance policy didn’t cover. Unfortunately, this does mean that you can lose your house if you’re found liable for a car accident that has resulted in a large judgment against you.
Typical Scenario Where You Could Lose Your House
Suppose you’ve been found 100% liable for an accident that caused $50,000 in property damage and $100,000 in medical expenses. You only carry the minimum amount of car insurance coverage Indiana requires.
Your insurance policy covers up to $25,000 for bodily injury per person, $50,000 total for bodily injury per accident, and $25,000 for property damage. After your insurance company pays this amount, you are responsible for an additional $75,000. The plaintiff has the legal right to collect this additional amount, which will put your personal assets, including your home, at risk. There is, however, one caveat that could protect your home from seizure.
Indiana’s Homestead Exemption
Losing your home due to an at-fault car accident isn’t as simple as not having the cash to pay any judgment amounts your vehicle’s car insurance policy didn’t cover. Fortunately, Indiana has what’s known as a Homestead Exemption. This exemption protects you from losing your primary residence. Here’s how it works.
Indiana’s homestead exemption’s purpose is to protect a portion of your primary residence’s value, an amount that creditors cannot seize. As of 2024, Indiana’s homestead exemption protects up to $20,000 of the equity in your home as long as it’s your primary residence.
So, if the plaintiff in the case is attempting to collect the additional damages that your car insurance policy didn’t cover, they technically can place a lien against your home in hopes of satisfying the judgment. However, $20,000 of your home’s equity is protected; if your home has joint ownership, the protected amount of equity is $40,000.
What To Do To Protect Your Assets If an At-Fault Car Accident Judgment Outweighs Your Insurance Policy
Unfortunately, the plaintiff can sue you if you’ve been found liable for a car accident and your vehicle’s insurance coverage is minimal and doesn’t cover the judgment. You’re legally responsible for paying this amount, which puts your assets at seizure risk. However, you can do a few things to lessen the burden.
- Bankruptcy protection: If the financial burden is overwhelming, you may be able to file for bankruptcy protection. While not always the best option since it will significantly damage your credit rating, it is an option that should be explored.
- Negotiate with the plaintiff: Sometimes, it’s possible to negotiate a payment plan agreeable to both parties. Doing so will protect you from losing your assets while still paying what you owe to the plaintiff.
Can I Lose My House Due to an At-Fault Car Accident Explained
While it is possible that you could lose your home due to an at-fault car accident in Indiana, it’s not likely. Drivers with additional vehicle insurance coverage are most likely the least at risk. Although some drivers purchase the minimum coverage required by the state, even if the policy doesn’t fully cover the judgment, there are other alternatives to paying what you owe.
If you feel you may be fully or mostly responsible for a car accident that has caused severe bodily and personal property damage, don’t face this dilemma without a legal team on your side. Since 1963, the skilled accident attorneys at Yosha Law have been protecting the rights of Hoosiers in need of legal representation. Contact an attorney today for a free consultation.
