When you're injured in a car accident and someone else is at fault, one of your first questions might be: who pays for damages in a car accident, and what happens if you decide to sue?
Medical bills, missed work, car repairs, and long-term care costs can add up fast. Suing might feel like the only option to recover what you’ve lost, but it’s not always clear who will be held financially responsible once you do.
The answer depends on several factors, including where the accident happened, how insurance laws work in that state, and several other unique facts of your case.

Key Takeaways
- The person or party who caused your accident is usually the one financially responsible for your losses.
- Insurance companies, not individuals, normally pay car accident settlements and verdicts.
- If the at-fault driver was working at the time of the crash, their employer might be legally liable.
- Suing someone doesn’t always mean going to trial. Most car accident claims are resolved through settlements.
- Even in “no-fault” states, you may still have the right to sue for serious injuries.
- When multiple parties share fault, each may be responsible for a portion of the damages.
- An experienced car accident injury lawyer can identify all liable parties and help pursue the maximum compensation available.
The At-Fault Driver Usually Pays—But Through Insurance
If you sue someone after a car accident, you’re usually seeking money from their insurance provider, not their personal bank account. Every state in the U.S. requires drivers to carry minimum liability insurance to pay for injuries and property damage they cause in a crash.
Liability insurance pays for:
- Medical expenses of other people injured in the crash
- Lost wages due to injury
- Vehicle repair or replacement
- Pain and suffering and other non-economic damages
This type of coverage does not pay for the at-fault driver’s own injuries or car damage. It strictly applies to victims.
However, if the person who caused your accident is uninsured or underinsured, you may be able to:
- File a claim through your own uninsured/underinsured motorist (UM/UIM) coverage
- Sue the individual directly
- Identify other potentially liable parties
Drivers without adequate insurance can still be held personally responsible, but collecting payment from them is often difficult. That’s why your own policy’s UM/UIM coverage is so important, and why it’s often the best source of compensation if you’ve been injured by a driver without insurance.
Employer Liability: When a Driver Was Working During the Crash
Sometimes, a car accident involves a driver who was “on the job” when the crash occurred. In these cases, the employer might be held legally responsible for your damages.
An employer can be liable if the at-fault driver:
- Was performing work-related duties at the time
- Was driving a company vehicle
- Was acting within the scope of their employment
This legal concept is called Respondeat Superior or “vicarious liability,” and it often applies in cases involving delivery drivers, commercial truckers, salespeople, or rideshare drivers working at the time of the accident.
This is an important aspect of a car accident claim if it applies, because employers typically carry commercial insurance policies with higher coverage limits than individual drivers. More coverage opens the door to larger settlements, especially in cases involving serious or permanent injuries.
What Happens in No-Fault States?
In some states, drivers must carry personal injury protection (PIP) insurance, which pays for their own medical costs and lost wages, regardless of who caused the accident. These are called no-fault states.
If you’re in a no-fault state, you usually have to file a claim through your own insurance provider first. You can sue the at-fault driver only if:
- Your injuries meet a certain threshold of severity
- Your medical bills exceed a specific dollar amount
Each state sets its own rules for what qualifies. Florida, for example, requires “permanent injury” or over $10,000 in medical bills to sue outside the no-fault system. There are currently 12 no-fault states in the U.S. However, even in these states, fault still matters. If your injuries are serious enough, you can still pursue a liability claim against the other driver or their employer.
Multiple Parties May Share Liability for a Car Crash
Car accidents often involve more than one liable party. When that happens, each party may owe a portion of the damages based on their share of fault.
Common scenarios involving shared fault include:
- Two drivers both made mistakes that contributed to the crash
- A commercial truck driver and their employer share liability
- A vehicle defect caused or worsened the accident
- A third-party mechanic failed to repair a known issue
Each of these situations can trigger multiple insurance claims and sometimes multiple lawsuits.
Comparative Fault and How it Affects Compensation
Most states follow some version of comparative fault, meaning your compensation is reduced by your percentage of responsibility for the accident. For example:
- If you were 20% at fault and awarded $100,000, you would receive $80,000.
- Some states bar recovery if you are 50% or more at fault.
- A few states bar you from compensation if you were just 1% at fault.
Because even a small shift in assigned fault can significantly reduce your compensation or eliminate it entirely in some states, having an experienced lawyer to build a strong, evidence-backed case can make a major difference in the outcome.
Suing a Government Entity After a Crash
When a government employee causes an accident or when unsafe road conditions contribute to a crash, the rules change.
Special considerations in government-related claims generally mean:
- You must follow strict deadlines, sometimes as short as 30-180 days
- You may have to file a “notice of claim” before suing
- Damage caps may limit how much compensation you can recover
Examples include accidents involving city buses, state highway maintenance failures, or police vehicles.
What Compensation Can You Seek Through a Lawsuit?
Filing a lawsuit isn’t about punishing the other driver. It’s about recovering your financial losses and supporting your recovery.
Common types of damages awarded in car accident lawsuits include:
- Medical expenses, including future care needs
- Lost wages
- Diminished earning ability
- Property damage
- Physical pain, emotional distress, and reduced quality of life
The total value of your claim depends on how severe your injuries are, how long recovery takes, and how much the accident affects your life.
How Long It Takes to Get Paid After Successfully Suing
You might expect a quick resolution after filing a lawsuit, but the timeline can vary widely. Some car accident lawsuits settle in a few months. Others take a year or more, especially if they go to trial.
Several factors affect how fast lawsuits are resolved and how long it takes to receive payment:
- The severity of your injuries and the length of treatment
- Whether fault is disputed
- The number of parties involved
- The court’s schedule
- Whether the insurance company is willing to settle
In general, cases with strong evidence, clear liability, and well-documented damages settle more quickly. Cases involving commercial defendants or catastrophic injuries often take longer.
After filing a lawsuit, both sides exchange information through discovery. This phase may include written questions, document sharing, and depositions. Mediation or settlement discussions often happen before trial. If the case still doesn’t resolve, it moves forward to a courtroom.
Even after winning a verdict, collecting the full amount may take time. Some defendants appeal, which can delay payment. Your car accident lawyer should understand your situation and keep you informed throughout the process about what to expect.
While your case is pending, your lawyer can help identify options to cover urgent expenses, such as using MedPay, PIP benefits, or negotiating with medical providers to delay billing. In some cases, they may also connect you with funding sources that provide financial support during recovery.
Do You Have to Pay Back Your Insurance Company?
In many cases, yes. If your insurance company paid for your medical bills or property damage and you later receive a settlement, they may seek reimbursement. This is known as subrogation.
If your health insurer or auto insurer paid for services related to your crash, they may place a lien on your settlement. This allows them to recover those costs from the compensation you receive from the at-fault party’s insurer.
Subrogation typically occurs when:
- Your health insurance paid for accident-related treatment
- You used medical payments (MedPay) or personal injury protection (PIP) coverage
- Medicare or Medicaid paid any part of your medical bills
A personal injury attorney can often negotiate with insurers to reduce the amount you must repay. This can increase the total funds you keep from your settlement.
Insurance Companies Are the Ones Who Pay—But Only When Required
Although the at-fault driver’s insurance company typically pays for your damages, they don’t do so automatically. You must prove liability and provide evidence of your losses.
To recover compensation, you need:
- Documentation of your injuries and medical treatment
- Proof of lost income or reduced earning ability
- Evidence showing the other party caused the crash
- Records of vehicle damage and repair costs
Without strong evidence, the insurer may delay or deny your claim. Having legal representation often helps prevent unnecessary disputes and strengthens your case.
Post-Accident Costs You Might Not Expect
Car accident claims aren’t limited to emergency treatment and car repairs. Injuries often cause long-term financial ripple effects that many people don’t realize until weeks or months later. Some commonly overlooked damages include:
- Future surgeries or follow-up care
- Long-term physical therapy or rehabilitation
- Mobility aids and home modifications
- Lost earning capacity if you can’t return to your old job
- Emotional and psychological impact of trauma
In serious cases, these costs can exceed the value of the vehicle or initial medical bills. That’s why it’s essential to consider the full picture and the impact of the accident on your future, not just your immediate or short-term needs.
You never want to find yourself in a situation where you don’t have the means to pay for your medical care or make ends meet because of accident-related costs and restrictions.
When Insurance Isn't Enough: Pursuing Additional Compensation
Insurance policies have limits. If your damages exceed what the at-fault driver’s policy will cover, you may need to look beyond standard insurance claims. You may be able to obtain additional compensation from:
- Employer policies if the at-fault driver was working at the time
- Umbrella insurance policies that provide additional coverage
- Third-party liability such as a vehicle manufacturer, road contractor, or bar that overserved a drunk driver
- Your own UM/UIM policy if the other driver is uninsured or underinsured
Each of these options depends on your unique situation, which is why a thorough investigation is so important to the value of your claim.
What to Expect Financially After Filing a Claim
It’s common to worry about legal costs, especially when you’re already dealing with medical bills and missed work. But the good news is that most personal injury attorneys don’t charge anything upfront.
Instead, they work on a contingency fee basis, meaning they only get paid if they win your case or negotiate an insurance settlement in your favor. You can get the legal help you need without taking on additional financial risk.
If your case is successful, your attorney’s fees will come out of the final settlement or verdict. Additional expenses may include filing fees, court costs, payments to expert witnesses, or reimbursement of any medical liens. These costs are clearly outlined in your agreement at the start of the case, so you’ll know exactly what to expect—no surprises, no hidden fees.
Working with a lawyer doesn’t just make the process easier, it usually results in a better financial outcome. A comprehensive study by the Insurance Research Council found that people who hire a lawyer after a car accident recover 3.5 times more compensation on average than those who handle the claim without a lawyer.

FAQ for Who Pays When You Sue in a Car Accident?
Can I sue if I was a passenger in the car that caused the crash?
Yes. As a passenger, you typically have the right to pursue compensation for your injuries, even if the driver of your own vehicle was at fault. You may be able to file a claim against their insurance policy.
What if the at-fault driver was under the influence?
If the other driver was impaired by drugs or alcohol, that may strengthen your case. In some situations, you might also have a claim against a bar or restaurant that overserved them under dram shop liability laws, depending on the state.
Will my settlement be taxed?
Personal injury settlements are generally not considered taxable income. Compensation for medical expenses, lost wages, and pain and suffering is usually tax-exempt. However, certain exceptions apply, so it's wise to consult a tax professional.
What if the driver who hit me was using a rental car?
Liability for rental car accidents can be complex. Depending on the circumstances, you may be able to file claims against the driver, their personal insurance, or supplemental insurance purchased through the rental company.
How do I prove future medical costs in a lawsuit?
Future treatment costs are often supported by expert testimony, medical evaluations, and documentation from your healthcare providers. Your attorney may also use life care planners or economists to calculate long-term expenses and strengthen your car accident compensation claim.
Getting Help with a Car Accident Lawsuit from Gallagher & Kennedy
Car accident claims can quickly turn into complex legal cases, especially when multiple parties are involved or insurance coverage is limited. You don’t need to figure it out alone. The personal injury attorneys at Gallagher & Kennedy bring decades of experience handling high-stakes, high-value cases for seriously injured clients in Phoenix, Arizona, and Santa Fe, New Mexico and beyond.
For more than 45 years, Gallagher & Kennedy has earned a reputation for handling some of the country’s most significant injury cases, from catastrophic car and truck accidents to product defects and wrongful death. With the resources of a large firm and the personal attention of a dedicated legal team, we fight for fair compensation while taking the pressure off your shoulders.
Call (602) 530-8400 or contact us online for a free consultation. There’s no fee unless we recover compensation for you.