Can Someone Sue You After Insurance Pays? Does a Settlement Prevent a Civil Lawsuit?

Can someone sue you after insurance pays? Generally, an insurance settlement will close the case. However, there are exceptions to this. If you’ve already accepted a settlement from the insurance company, then it makes it difficult – but not impossible – to file a lawsuit.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: May 27, 2021

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In the United States, car accidents are routinely followed by lawsuits.

Are you able to sue someone after an insurance payout? Does getting a settlement from an insurance company prevent a civil lawsuit? Today, we’re answering those questions and explaining everything you need to know about suing someone – or getting sued – after a car accident.

Agreeing to an Insurance Settlement Typically Prevents Further Lawsuits

Generally, an insurance settlement will close the case. The settlement is designed to wrap everything up. That means you will not be able to seek further compensation for that case beyond the settlement you already received.

However, as any auto insurance lawyer will tell you, there are always exceptions to this rule. If you’ve already accepted a settlement from the insurance company, then it makes it difficult – but not impossible – to file a lawsuit.

When an insurance company settles a claim, the insurance company is agreeing to pay a certain amount of money to wrap up the entire claim. The settlement agreement will include language that prevents the victim from asking for more money in the future.

As the victim, you’ll need to sign a waiver or release to accept the cash settlement. This waiver is a legally binding contract. It prevents you from making any further claims. There are few exceptions. Once you sign the contract, you cannot pursue further compensation.

A settlement agreement might state that the victim will receive $100,000 for medical expenses and pain and suffering following an accident, for example. In exchange for accepting that settlement, the victim will agree to not seek further compensation from future lawsuits.

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How to File a Lawsuit After a Car Insurance Settlement

A settlement agreement will clearly state that no further compensation will be given to the victim from the car insurance company.

What if the victim discovers that the settlement was a bad deal? What if the victim’s injuries are more severe than initially reported? What if a minor injury turns into a lifelong disability?

In this situation, it’s possible for the victim to ignore the terms of the settlement and file a lawsuit for extra compensation. Due to the terms of your settlement, however, your lawsuit will likely be dismissed from court immediately.

Filing a lawsuit is as straightforward as submitting legal documents to a court and paying the required fees. You can file a lawsuit on your own. Or, you can hire a lawyer.

Filing a lawsuit after you’ve accepted a settlement is very easy. There’s nothing preventing you from filing a settlement. However, actually winning that settlement is a whole different story.

You May Have Trouble Winning the Lawsuit

Yes, you can file a lawsuit after you’ve agreed to a settlement with the insurance company.

However, it’s very possible that the judge will throw your lawsuit out of the court. After hearing your lawsuit, the defendant will inform the judge of the settlement agreement. At this point, the judge might dismiss the lawsuit. After all, the settlement agreement clearly states that you agreed to pursue no further compensation.

If the judge dismisses your lawsuit for this reason, then you might be on the hook for all legal fees and other costs of the defendant. Your post-settlement lawsuit could end up costing you thousands of dollars.

Are There Any Exceptions? Can I Ever File a Lawsuit After a Settlement?

To avoid having your lawsuit dismissed, you’ll need to convince the judge that you have a solid reason for filing the lawsuit.

In rare cases, you might be able to file a lawsuit after you’ve agreed to a settlement.

If you can prove you agreed to the settlement due to fraud or coercion, for example, then you may have a case.

Generally, however, you’re responsible for reading and understanding any contracts you sign.

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Do Not Sign Any Settlement Offers Until You Fully Understand the Damages

If you’ve been involved in a serious car accident, then you may be owed significant compensation.

Car insurance companies know this. That’s why they’ll try to close your case as quickly as possible. They might dazzle you with a big cash offer soon after your accident, for example.

You might be required to pay thousands of dollars per year in medical costs and medication for the rest of your life after a car accident. The initial cash settlement offer might look large. However, it might not be adequate compensation for a lifelong disfigurement or disability.

For that reason, it’s important you avoid signing any settlement offers until you fully understand the damages, medical costs, lost wages, pain and suffering, and other expenses you’ve incurred. Consider hiring a car accident attorney to ensure you get fair treatment.


When you sign a settlement with a car insurance company, you’re agreeing to receive money in exchange for closing the case. You might agree to receive $100,000 from the car insurance company in total compensation for your vehicle damage, medical expenses, lost wages, and pain and suffering. In order to get this money, you must sign a waiver and release. This waiver and release prevents you from taking any further legal action against the insurance company.

That waiver or release is a legally binding contract. You are bound by the terms of that contract. There are limited exceptions to this rule.

If you feel you have a legitimate reason to sue a car insurance company after a settlement has been reached, then contact a car accident lawyer today. Your options may be limited, however, and it’s typically difficult to file a lawsuit after a car insurance settlement has been reached.

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