When an acquaintance of ours  was found at fault in a car accident, their immediate thought was, “Will I lose my home?” This panic is common among drivers, especially those with insufficient or no insurance, after car accidents. Understanding how settlements are paid and what liabilities an at-fault driver might face is crucial to navigating the weeks and months after a serious accident while protecting your assets.

Understanding Liability and Insurance Coverage

In addition to potentially being in a life-changing car accident, being found at fault in a car accident means you are legally responsible for the damages caused. The responsibility for paying these damages typically falls on the driver and, by extension, the driver’s insurance provider. Most car insurance policies include liability coverage, which is designed to pay for the damages and injuries you cause to others, including property damage and medical expenses, up to the policy’s limits.

However, not all insurance policies are created equal. Adequate insurance will cover most, if not all, expenses arising from an accident. Conversely, cheaper insurance often comes with lower coverage limits, potentially leaving you responsible for any costs that exceed those limits. If you have no insurance, you are personally liable for all damages, which can be financially devastating.

What Happens if You Have Insurance

When you have insurance and are at fault in a car accident, your insurance company steps in to manage the claim. This process involves assessing the accident, determining fault, and working with the other party or their insurance company to try and reach a resolution. They then negotiate, aiming to reach a settlement that covers the damages and injuries within the limits of your policy.

Insurance companies aim to settle claims efficiently to avoid lengthy and costly legal battles. However, they are only obligated to pay up to the policy’s coverage limits. If the damages exceed these limits, the remaining costs can fall to you personally. This shortfall is one of the biggest downsides of cheaper insurance.

Your insurance company’s role is to protect you up to the extent of your policy, but it’s essential to understand that they also work to minimize their own costs. Therefore, being proactive throughout the claims process and retaining a car accident attorney to help you navigate it is key to protecting your financial interests after a severe car accident. It’s important to note that this holds true for civil liability cases only. If you’re accused of a crime, such as driving under the influence or driving recklessly, you’ll need a criminal defense attorney to help manage the criminal side of the case.

At-Fault Car Accidents in New Mexico

When it comes to car accidents in New Mexico, the state follows the principle of pure comparative negligence in car accident cases. This legal standard holds that fault is distributed among all parties involved in an accident, meaning most car accidents are at-fault car accidents. For example, if you are found to be 70% at fault for an accident, you are liable for 70% of the total damages, while the other party covers the remaining 30%. In New Mexico, both parties must be ready to present evidence and arguments regarding their level of fault in the accident.

This system allows for a fairer distribution of financial responsibility, especially in cases where both drivers may have contributed to the accident. It also means that even if you are predominantly at fault, you can still recover some compensation for your damages, reduced by your percentage of negligence.

Personal Liability in At-Fault Car Accidents

When your insurance coverage does not cover all the damages from an at-fault car accident, you become personally liable for the remaining costs. This liability can lead to severe financial consequences, including a lien being placed on your home if you cannot afford to pay the assessed damages. A lien does not mean you will immediately lose your home; rather, it is a legal claim against your property to ensure payment of debt.

Liens create issues when you try to refinance or sell your home, as the lienholder will receive compensation for what they’re owed before you get your money. For example, if you sell your home for $400,000, and there’s a lien for $200,000, the lienholder will receive $200,000 from the sale, and you will only receive $200,000.

In rare circumstances, the creditor may not be satisfied with the lien and may take proactive measures to take possession of your home. This process would involve foreclosing on the property and then paying off the mortgage company, if there is one, and any other creditors on the property before collecting any remaining money. New Mexico also has a homestead exemption for your primary residence, which exempts $150,000 to $300,000 from what the creditor can collect in the event that you declare bankruptcy, which is a likely outcome after a large judgment against you.

However, foreclosing on a property is an expensive process for the lienholder. It could result in them receiving less than they’re owed after all other creditors are paid out and the homestead exemption is accounted for, which makes it a relatively uncommon outcome. However, the lien allows them to do this, so there’s always the risk that you could lose your home if a judgment is made against you after an at-fault car accident and you cannot pay.

However: There are ways to protect your assets and mitigate this risk. One effective strategy is to consider additional coverage options, such as umbrella insurance policies. These policies provide extra liability protection beyond the limits of your standard car insurance, covering various liability claims and offering a buffer that can help safeguard your assets from large settlements or judgments.

Getting the Right Car Accident Attorney for At-Fault Car Accidents

Facing the aftermath of an at-fault car accident can be daunting, especially with the fear of losing your home. The comparative negligence system in New Mexico means that the percentage of fault you’re found to be at in an accident can make a difference in tens or even hundreds of thousands of dollars in what you owe or are owed. After any car accident, it’s critical to contact a car accident attorney, as their expertise can make a massive difference in the percentage of the accident you’re liable for. At Kane, we only get paid if you win your case. Schedule a free, no-obligation consultation today to review your case and learn more about your legal next steps.