A common scenario goes something like this: I was involved in an accident a year ago, and was found to be at fault. At the time, my insurance company paid off the claim, but an additional lawsuit has recently been filed, which would be outside the limits of my policy. What should I do?

The first thing most people do in a situation like this is panic. But there are some things to keep in mind, and when the panic attack ends, you probably won’t be any worse off than you were going into the situation.

First, contact your insurance company. If you have changed companies since the accident, contact the one who handled the original claim. (It might also be wise to mention that if you’ve jumped ship, the insurance company is likely to be willing to help you. Loyalty is a two-way street.) Unless there are some sort of mitigating circumstances that justify a new lawsuit being brought, your original coverage is still valid, and the insurance company is still responsible for providing your the protection afforded in that policy at the time of the accident. Contact the insurance company, and make sure they are on the job.

For one thing, find out what the statue of limitations is for your state. If too much time has passed, filing a new claim is a fruitless quest. Now, lawyers know about the statute of limitations, and if the suit if being filed by a reputable attorney, this is not likely to be an issue. On the other hand, if the lawsuit is being used as a way to pressure you into paying more money that you are not actually liable for, disreputable representatives are subject to try anything.

As a general rule, the limits of your policy will be the limits within a claim is settled. It is rare for additional amounts to be levied beyond the policy coverage. In fact, the idea has been put forth that this generally only happens when the circumstances indicate that the defendant is likely to have assets that can be easily liquidated. This can be a tricky area, as it involves calculated loss risks in an endeavour to make additional gain. For this, it is probably in your best interest to make sure your insurance company is providing counsel, or contract for a lawyer of your own.

In a vast majority of accidents, the policy of the person found at fault is sufficient to cover the penalties and injuries involved. In those few circumstances when this is not true, you will generally know very shortly after the accident, and will be able to begin making allowances for coming up with the additional funds. For a lawsuit to be filed more than a year later, a great deal of causative effect has to be shown, and a reasonable explanation for such a long delay in bringing the suit. Your insurance company is your first line of defense, and putting a lawyer of your own on retainer is the next step. Don’t attempt to represent yourself in such a situation, as it is likely to be a skilled legal battle, and the facts of the accident will be of little regard