Can My License Be Suspended For An Unpaid Insurance Claim?

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Legally reviewed by Jesse Bernheim on December 8, 2022 Jesse Bernheim is a member of the 1-800-Injured network.

After a car accident, you have a lot on your mind — from medical bills to repair costs to administrative issues that can come along with a crash. But one thing you might not think about is the potential impact an unpaid insurance claim can have on your driver’s license.

If you are in an accident and the other driver files a claim against your insurance policy, the two insurers and your legal representation will need to determine some key details about the crash, most importantly who is at fault. If the other driver’s insurance company asserts that you caused the accident and your insurance company fails to pay out on your policy, they may take legal action against you to recover the money they paid out.

Why Do Insurance Companies Sometimes Refuse to Pay

The same is also true if you are the victim in the crash. Many insurance companies work to avoid paying claims if at all possible in the event that their policyholder is the one responsible for the accident. This could mean stalling on reaching a final decision, nitpicking details about your claim, or simply trying to put as much blame on you as possible to reduce the amount they pay.

As a victim in a crash, working with a personal injury attorney is an important step in getting justice and recovering the money you are entitled to. But if an insurance company still refuses to pay, your attorney may need to take legal action and file a lawsuit. 

Depending on the state you live in, there may be a statute of limitations anywhere between one and four years following the crash, meaning that a victim has the right to take legal action until that amount of time has passed from the date of the accident. During this time, a personal injury attorney can work to reach a settlement agreement to avoid taking the case to court.

Consequences of Having Unpaid Claims

In some states, having unpaid medical or property damage bills as a result of an accident can lead to a suspended license. This would typically be done by the state’s Department of Motor Vehicles (DMV) or Motor Vehicle Commission (MVC)  to ensure that drivers are held accountable for their actions. If a driver does not pay out on an insurance claim, the other driver may petition for a suspension of their license until payment is made in full. It’s important to remember that this can vary from state to state.

If you are involved in an accident and find yourself dealing with uncooperative insurance companies or facing potential legal action, speak with a personal injury attorney as soon as possible. An experienced car accident lawyer can help protect your rights while ensuring that you get the compensation you deserve following an accident.

How Can a Driver’s License Be Suspended?

There are a number of ways that someone may have their driver’s license suspended, but the most important thing to remember is that an insurance company does not have the power to do so. They may be able to submit a complaint to the department that oversees licensing in your state, but the ultimate decision regarding suspension is up to the state itself.

Generally, a driver’s license can be suspended for reasons such as not having the proper insurance coverage, failing to pay fines or tickets, accumulating too many points on your driving record, or being convicted of certain criminal offenses. In some cases, a driver may even have their license suspended if they fail to pay the required fees or fines associated with an unpaid insurance claim.

Something important to note is that while you are working on settling a claim or planning to file a lawsuit, there may be a period where one party believes that there is a liability issue but no one has established who is at fault. During this time, the insurance company may be more likely to resolve the dispute through negotiation and out-of-court settlements instead of going to trial or seeking a license suspension.

It’s also important for all drivers to remember that they have certain rights when it comes to getting compensated after an accident and that they should take appropriate actions if their insurance company is not being cooperative. Working with an experienced personal injury attorney may be the best way to ensure that these rights are respected and that a fair settlement is reached.

How Long Does a License Suspension Last?

The length of a driver’s license suspension can vary depending on the state and the reason for the suspension. Generally, suspensions may last anywhere from 30 days to several years, with some suspensions being permanent.

If a driver is facing a suspended license due to an unpaid insurance claim, they should contact their auto insurance company or attorney who can help them provide documentation about the ongoing dispute between insurance companies about fault, payment totals, and more. In instances where an insurance company incorrectly submitted a complaint about an unpaid claim before the matter has been fully resolved, your attorney may be able to have the suspension lifted so that you can continue to drive legally.

What to Do After an Accident with Someone Who Has a Suspended License

While we’re on the topic of suspended licenses, let’s talk about what to do if you are in an accident with someone who already has a suspended driver’s license. In this case, it’s important to remember that you don’t have any way of knowing whether they have a valid license until a police officer arrives at the scene — which is another reason why you should always call 911 after a crash.

The best course of action is to contact your personal injury attorney and follow their advice. Your attorney can provide you with the best strategy for ensuring that you receive the compensation that you deserve and can also advise you on any potential legal action that may need to be taken. 

1-800-Injured is a lawyer and medical referral service that can connect you with a personal injury attorney with ease. Contact us right away to get started with a legal professional and protect your rights as you seek a just outcome to your car accident claim.