Can I Still Sue If Insurance Is Already Involved in My Car Accident?

The short answer: usually yes.

After a car accident, one of the first things most people do is contact an insurance company. The insurance company may pay for vehicle repairs. It may cover medical treatment. It can also include accident benefits and other costs from the crash.

Once insurance becomes involved, many people assume the matter is over.

A common question injured drivers and passengers ask is:

Can I Still Sue if Insurance is Already Involved in My Car Accident?

In many cases, the answer is yes. Across Canada, insurance claims and lawsuits often work alongside each other. Just because an insurance company paid benefits or fixed your car, it doesn’t mean you can’t go to court for more money.

You may still be able to sue. It depends on a few factors.

• First, where did the accident happen?
• Next, what type of insurance payment was made?
• Finally, did you sign a settlement agreement or release?

Why Many People Think Insurance Prevents a Lawsuit

After an accident, many think that once an insurance company pays anything to the injured party, the claim is done.

This misunderstanding is understandable. Insurance companies take care of repairs, provide benefits, and talk to accident victims. This all happens at the start of the claim process. As a result, people often assume insurance replaces the need for legal action.

However, it’s important to understand that insurance claims and lawsuits serve different purposes.

Insurance is designed to provide financial protection after an accident, but insurance coverage varies and may not be able to help with all losses after an accident. A lawsuit is a legal claim against the at-fault driver that seeks compensation for losses that may not be fully covered by insurance.

In many cases, a person can access insurance benefits while also filing a legal claim against the at-fault driver. 

Understanding the Different Types of Claims After a Car Accident

One reason accident claims can be confusing is that there may be several different claims arising from a single collision. Generally, those involved in a car accident will claim for property damage, accident benefits, and personal injuries.

A property damage claim deals with damage to your vehicle and personal property. These claims are usually handled directly through your insurance. In Nova Scotia, vehicle damage claims are handled through a Direct Compensation Property Damage (DCPD) system. Under this system, drivers generally seek compensation for vehicle damage from their own insurer rather than the insurer of the at-fault driver.

There may also be accident benefits claims through your insurance. These benefits can help pay for medical treatments. They also cover rehab costs and income replacement. Other accident-related expenses may be included too. 

The accident benefits you receive depends on the province. In Nova Scotia, accident benefit claims are processed by the injured person’s own automobile insurer under the no-fault Section B provisions of the standard automobile policy, regardless of who caused the accident.

Then there are personal injury claims. These claims often ask for money for pain and suffering from the insurance company of the at-fault driver. They also cover lost income and future care costs. Other damages may go beyond basic insurance benefits.

Most importantly, receiving payment for one type of claim does not cancel your right to apply for another.

The Role of Insurance After a Car Accident

Insurance plays an important role after a collision. 

Automobile liability insurance is mandatory in every province and territory. Although the minimum required coverage varies by jurisdiction, every driver must carry third-party liability insurance to legally operate a vehicle.

Third-party liability coverage—commonly referred to as Section A of the standard automobile policy—protects drivers who are found to be legally responsible for causing an accident. 

If an injured person brings a claim against an at-fault driver, Section A requires the insurer, provided there has been no breach of the policy, to defend the claim on the insured’s behalf. The insurer typically retains legal counsel, investigates the claim, negotiates settlements where appropriate, and pays any damages or settlement amounts up to the policy limits.

Beginning a legal claim is a significant step and is not necessary in every case. Many motor vehicle claims, particularly those involving straightforward facts and reasonable parties, can be resolved through negotiation without the need to commence a lawsuit. 

In many instances, insurance adjusters and lawyers are able to negotiate a fair settlement, avoiding the time, expense, and uncertainty of litigation. 

Nevertheless, there are circumstances in which litigation becomes necessary. Litigation may be unavoidable when the insurer disputes liability, alleges that the injured person was wholly or partially responsible for the collision, or refuses to offer reasonable compensation.

When a lawsuit is commenced, it is generally filed against the at-fault driver—not the insurance company. Although the named defendant is the driver, the insurer usually assumes responsibility for the defence under Section A of the policy. 

The insurer appoints and instructs defence counsel, funds the legal defence, makes strategic decisions about settlement, and, if liability is established, pays damages up to the applicable policy limits. As a result, while the lawsuit proceeds in the name of the driver, the insurance company is ordinarily the party directing and financing the defence.

Accident Benefits and Lawsuits Are Not the Same Thing

A common myth after a collision is that getting accident benefits stops a lawsuit. However, this is not true.

Unlike lawsuits, accident benefits are available in many provinces regardless of who caused the accident. These benefits may cover medical expenses, rehabilitation costs, and income replacement benefits.

However, accident benefits do not necessarily compensate a person for all their losses.

Although a person may get physiotherapy paid for from their insurer through their Section B benefits, they can also claim against the at-fault driver through Section A for damages, including pain and suffering, lost future income, and future care costs.

In Ontario and Nova Scotia, this two-track system is well established. Accident benefits claims and tort claims often proceed at the same time.

Can I Sue the At-Fault Driver If Insurance Is Already Involved?

In most provinces, the answer is yes.

In Nova Scotia, the fact that the at-fault driver has automobile insurance does not prevent an injured person from bringing a lawsuit. While insurance is intended to provide compensation and a legal defence for the insured driver, the legal claim is still brought against the driver—not the insurance company.

These claims often involve damages such as:

• Pain and suffering;
• Past income loss;
• Future income loss;
• Future care costs;
• Loss of enjoyment of life; and
• Housekeeping and home maintenance losses.

Most injury claims are resolved through negotiations between the injured person’s lawyer (or the injured person if self-represented) and the at-fault driver’s insurer. If the parties are able to agree on liability and the value of the claim, a lawsuit may never be necessary. However, if negotiations reach an impasse, liability is disputed, the insurer denies the claim, or the limitation period is approaching, the injured person may commence a lawsuit to preserve their legal rights.

Can I Sue the Insurance Company Directly?

This depends on the circumstances and the laws of the province involved.

In most personal injury cases, the lawsuit targets the at-fault driver, not the insurance company.

However, there are certain situations where legislation allows claims involving insurers directly. These situations can get tricky. They often are dependent on the type of insurance policy and the legal rules in the province.

Suing an insurance company isn’t the same as suing the person who caused the accident. 

What Happens If Insurance Has Already Paid?

This is where many people become confused.

The fact that an insurance company has paid money in general does not necessarily mean you have lost the right to sue.

For example, an insurer may pay:

• Vehicle repair costs;
• Medical treatment expenses;
• Accident benefits; or
• Income replacement benefits.

These payments alone do not automatically prevent the injured party from pursuing future legal action.

When determining if your legal rights have been impacted, the key questions are whether a settlement was reached and whether you signed a release.

What Is a Release and Why Does It Matter?

A release is a legal document that is typically signed by the insured once their insurance company reaches a settlement.

When you sign a release, you are agreeing that your claim has been fully resolved. You are also promising to not take any future legal action related to the accident.

As you can imagine, this makes a release one of the most important documents in any injury claim.

Many accident victims look at the money offered but ignore the particulars of the release. However, the release is often more important than the settlement cheque. This is because it significantly impacts your legal rights.

After you sign a release, getting more money later can be difficult or impossible. This is true even if your injuries get worse than you thought, which is why we always advise that individuals considering signing a release seek legal advice before doing so. Many law firms, NOVA Injury Law included, offer free consultations where you can have the value of your claim explained to you. This helps keep people from making potentially premature decisions.

Can You Still Sue After Signing a Settlement?

In most situations, no.

A settlement combined with a signed release generally brings the claim to an end. It is confirmation that you accept the settlement in full satisfaction of your claim. You may also be required to sign a Confidentiality Agreement, depending on the terms of the settlement. 

After the settlement documents have been signed and the settlement funds have been paid, the insurance company will close your file.

Before signing a Release, it is important to understand its legal effect. A settlement is generally final and binding. Once you have signed the Release, you cannot reopen your claim or seek additional compensation, even if your injuries later worsen, you require further treatment, or you discover expenses that were not included in the settlement.

As mentioned above, signing too early may bring about problems in the future. For example, a person might settle their injury claim six months after a collision. They think they are recovering well. A year later, they start having chronic pain. They find out they need ongoing treatment.

As unfortunate as that situation is, if they signed a release in the settlement, they usually can’t reopen the claim or ask the insurer for more money.

It cannot be understated: you need to understand the consequences of accepting a settlement offer and signing a release. Do not agree to it without knowing what it means and the ways it can affect you in the long-run. Signing a release without consulting a lawyer is generally not recommended.

Policy Limits and Why They Matter

Every insurance policy has limits, with limits varying depending on the amount of coverage offered by your policy along with if you purchased extra coverage. 

The law in Nova Scotia requires drivers to carry $500,000 of liability insurance. This limit represents the maximum amount an insurer may be required to pay under the policy.

Extra coverage beyond the $500,000 is available. For example, in NS, if you purchase the “SEF-44” endorsement, your insurance company promises to cover the portion of your injury claim that is in excess of the at-fault driver’s coverage, should it be less than the value of the endorsement, which is often sold for a coverage value of one or two million dollars,

However, in some serious injury cases damages exceed available insurance coverage. This is called an ‘over-limits’ claim.

When that happens, complicated legal issues may arise. In some cases, an injured person can ask for more money than the policy covers. This could put the at-fault driver at personal risk. 

Fortunately, most claims are resolved within the available insurance coverage.

What Happens If the At-Fault Driver Is Uninsured?

Most drivers in Canada carry automobile insurance because it is legally required. However, accidents involving uninsured drivers still occur. A driver may be operating without insurance, may have allowed their policy to lapse, or may leave the scene in a hit-and-run collision.

Every province and territory requires automobile insurance policies to include some form of coverage in place to protect innocent victims when the at-fault driver is uninsured or cannot be identified.

If you are injured by an uninsured driver, your own automobile insurance policy may provide coverage that effectively takes the place of the uninsured driver’s liability insurance, provided you have the applicable coverage.In these situations, instead of recovering compensation from the at-fault driver’s insurer, you make a claim through your own automobile insurance policy. For example, in Nova Scotia, injured persons can generally access Section B Accident Benefits through their own insurer regardless of who caused the collision. 

In Nova Scotia, every standard automobile policy includes Section D, which provides Uninsured and Unidentified Automobile Coverage. This essential provision offers protection for insured individuals who suffer injuries caused by motorists lacking valid insurance or those who remain unknown following a collision.

In these situations, you will generally make a claim under Section D of your policy. This allows for your insurer to effectively step into the place of the uninsured driver and compensate you for the damages you are legally entitled to recover, up to the applicable policy limits.

If your injuries are extensive or there are multiple people injured in a single accident, the coverage provided by your insurance policy may not be enough. 

In this case, recovery may still be available by pursuing a negligence claim against the uninsured at-fault-driver through the Facility Association, which administers Nova Scotia’s Uninsured Automobile Fund. 

The Facility Association is the insurer of last resort in Nova Scotia providing coverage when no other insurer is responsible for the claim, such as when an injured person has no access to Section D coverage because they are uninsured. In Nova Scotia, the maximum coverage available through the Facility Association is generally the province’s minimum liability limit of $500,000.

Special Rules Across Canada

Canada does not have a single automobile insurance system.

Each province has its own rules governing insurance policies, claims and lawsuits.

Some provinces have no-fault systems. Others use hybrid systems that combine accident benefits with the ability to sue at-fault drivers.

Because of these differences, the answer to the question “Can I still sue?” often depends on where the accident happened.

Nova Scotia: Can You Still Sue If Insurance Is Involved?

In Nova Scotia, insurance involvement does not automatically end your right to sue.

If another driver’s carelessness caused the crash, you might be able to seek compensation. This can cover losses that go beyond what insurance pays.

These claims can include:

• Compensation for pain and suffering;
• Lost income;
• Future income loss;
• Future care costs; and
• Other damages.

Most injury lawsuits in Nova Scotia are effectively defended and funded by the at-fault driver’s insurer. However, the claim itself is still brought against the at-fault driver.

Nova Scotia also has limitation periods that apply to personal injury claims. Often, a lawsuit must be started within two years of the accident or the date the injury was reasonably discovered. Missing a limitation deadline can result in the loss of important legal rights and may impact your ability to sue. 

Why People Still Sue Even When Insurance Is Paying Benefits

There are many reasons why accident victims pursue lawsuits despite receiving insurance benefits.

Insurance benefits may not fully compensate a person for serious injuries. A collision can impact a person’s work, hobbies, family time, and overall quality of life.

Future treatment costs and rehab can be high. Chronic pain and permanent injuries add to these losses. They often exceed what insurance covers.

When those losses are not fully addressed, a lawsuit may be necessary to seek fair compensation. 

What Happens After You Decide to Start a Lawsuit?

Many people feel nervous when they hear the word “lawsuit.” They picture a long courtroom battle and years of legal proceedings. In reality, most car accident lawsuits do not end up going to trial.

Once a lawsuit is started, the injured person files legal documents against the at-fault driver. The driver’s insurance company is usually notified right away. In most cases, the insurance company hires a lawyer to defend the claim and handle the case on behalf of the insured driver.

After the lawsuit begins, both sides gather information about the accident and the injuries involved. Medical records, employment records, witness statements, and expert reports can be gathered. They help show how the accident has affected the injured person.

During this stage, settlement discussions often continue. In fact, many claims settle long before a trial becomes necessary. As more information is shared, both sides understand the claim’s value better. They also see the risks of continuing the lawsuit.

In some provinces, mediation may be used to help the parties reach an agreement. Mediation includes a neutral third party who helps both sides talk about the case and explore possible settlement options. While a mediator cannot force either side to settle, mediation often helps resolve disputes without the need for a trial.

If the parties cannot reach an agreement, the matter may eventually proceed to court. A judge, and sometimes a jury, will hear the evidence and decide whether compensation should be awarded, and if so, to what amount.

It is important to remember that starting a lawsuit does not mean you are guaranteed to go to trial. Many people are surprised to learn that most personal injury cases settle before reaching that stage. Filing a lawsuit is just one step to protect your rights. It gives you time to understand your injuries, future treatment needs, and financial losses. Then, you can make a better decision about your claim.

For many accident victims, a lawsuit is a way to get fair compensation. This is important when insurance benefits don’t fully cover the impacts of a serious injury.

Common Misconceptions About Insurance and Lawsuits

A common myth is that insurance payments stop legal action.

Another misconception is that suing always means pursuing the at-fault driver personally. In reality, insurance companies are often heavily involved in defending and funding claims.

Some people think that accepting accident benefits means they can’t sue anymore. In most cases, that is not true.

Finally, many Canadians assume every province follows the same rules. Automobile insurance systems differ a lot around the country. Legal rights also change based on where the accident happened.

Conclusion

Just because insurance is involved in your car accident claim doesn’t mean you can’t sue.

Often, insurance claims and lawsuits operate alongside one another. Accident benefits and vehicle repair payments don’t usually stop legal action. Insurance payouts also don’t prevent legal action against the driver at fault.

In Nova Scotia, injured accident victims can get compensation from at-fault drivers through legal channels, even if insurance companies are involved. 

However, knowing the difference between insurance payments and legal settlements is important. It helps you avoid giving up key rights after a serious crash. 

It’s always a good idea to seek legal advice. 

Most firms provide free case consultations to help you better understand your claim. At NOVA Injury Law we offer 100% free case consultation which can be made at any of our offices across Atlantic Canada. 

For more information or to set up an initial consultation, you can reach us by calling 902-706-5205 at any time. Our team is available 24 hours a day, 7 days a week, to support you and your loved ones via email, text, Facebook messenger, and more. We’ll be there for you every step of the way.