Can You Lose Your House To An At-Fault Car Accident In New Jersey?

By Doug Standriff on November 10, 2025

If you’ve ever wondered if you can lose your house due to an at-fault car accident in New Jersey, you’re not alone. It’s a common concern, especially for responsible drivers who worry about worst-case scenarios. Accidents can happen in the blink of an eye, and if you’re found to be at fault and someone is seriously injured, you may face a substantial claim for damages. That naturally raises the question: could your personal assets, including your home, be at risk?

The short answer is yes, under certain circumstances, it is possible. However, the more accurate answer depends on several factors, including your insurance coverage, the severity of the damages, the outcome of a lawsuit, and the structure of your assets.

Let’s explore how liability works in New Jersey, how your home might be exposed, and what steps can help protect you from losing your most important asset after a car accident.

Understanding Liability in New Jersey Car Accidents

New Jersey is a “no-fault” state when it comes to car insurance, but that doesn’t mean you’re off the hook if you cause a crash. In a no-fault system, your own insurance covers your medical bills up to a certain point, regardless of who caused the accident. However, if the injuries are severe, say, permanent disabilities or disfigurement, the injured party has the right to step outside the no-fault system and file a lawsuit against the at-fault driver.

That’s where things can get financially dangerous. If a court determines that you were responsible for the accident and awards the injured party a substantial sum in damages, the compensation they receive could exceed your car insurance policy limits. When that happens, your personal assets, including your home, can be targeted to satisfy the judgment.

What Happens When Damages Exceed Insurance Limits?

Most drivers carry insurance that includes liability coverage, which helps pay for bodily injury and property damage to others. But if you only carry the minimum required by law (which in New Jersey is $25,000 per person and $50,000 per accident for bodily injury), you might find yourself in financial jeopardy after a serious crash.

Let’s say you cause an accident and the injured party wins a judgment for $300,000. If your policy only covers $50,000, you’re personally responsible for the remaining $250,000. That unpaid amount becomes a civil judgment against you, and the injured party or their attorney could attempt to collect it through wage garnishment, bank account levies, or a lien on your property, including your house.

Whether or not you actually lose your house depends on several factors, including the amount of equity you have in it, whether the property is held jointly with someone else, and whether any exemptions apply under New Jersey law.

Homestead Protections and Exemptions in New Jersey

Some states offer “homestead exemptions” that protect a portion of a person’s home equity from creditors. Unfortunately, New Jersey does not offer a strong homestead exemption, unlike many other states. That means your house is not automatically protected from a judgment creditor unless you have taken specific legal steps beforehand.

For example, if you own your home jointly with a spouse under what’s known as “tenancy by the entirety,” that could offer some protection, but only if the judgment is against one spouse and not both. Likewise, if you have a mortgage, the creditor would be second in line behind the lender. That might make it more complicated for them to pursue the home, but it doesn’t make it impossible.

Asset Protection Strategies

One of the best ways to protect your home and other personal assets is to carry higher limits on your auto insurance and consider purchasing an umbrella policy. An umbrella policy provides extra liability coverage above and beyond your auto insurance, and it’s often surprisingly affordable.

Another strategy is to work with a financial advisor or attorney to structure your assets in a way that offers protection in the event of a lawsuit. This may involve transferring certain property interests or creating legal entities, but these strategies should be implemented well in advance of an accident occurring. Once a claim or lawsuit is filed, any sudden asset transfers could be viewed as fraudulent by the courts.

The point is this: if you wait until after the accident to worry about asset protection, you may already be too late.

What to Expect During a Lawsuit

If you are sued following an at-fault accident, you’ll be served with a legal complaint. Your insurance company will likely provide a defense attorney, but only up to your policy limits. If it appears that damages could exceed those limits, the plaintiff’s attorney may try to negotiate for more, and that’s when your assets become part of the equation.

Judgments in personal injury cases can cover far more than just medical bills. They may include pain and suffering, emotional distress, future medical treatment, and lost earning capacity. This is why serious accidents often result in significant financial exposure, especially when the injured party is unable to return to work or requires lifelong care.

If the court rules against you and you are unable to pay the judgment, it doesn’t disappear. In New Jersey, a judgment can remain enforceable for 20 years and be renewed. That means a lien on your property could remain in place for decades, possibly affecting your ability to refinance or sell the home.

When to Speak to a Lawyer

The legal and financial consequences of a serious car accident are not to be taken lightly. Whether you’re a high-net-worth individual or an average homeowner, your house could be at risk depending on the circumstances of the accident and the scope of your insurance coverage.

It’s always wise to speak with a qualified attorney if you’ve been involved in a car accident, especially if you’re concerned about personal liability. An attorney can help you understand your exposure, navigate the insurance process, and protect your rights both inside and outside of court.

How Bergen Law Can Help

At Bergen Law, we’ve spent over 30 years helping New Jersey residents understand their legal rights after car accidents. We’ve represented both plaintiffs and defendants, and our extensive litigation experience provides us with a comprehensive understanding of how car accident lawsuits unfold, particularly when substantial damages are at stake.

If you’ve been involved in a serious crash or are facing a potential lawsuit, we’re here to help you understand your risks and options. Our team will take the time to explain your legal standing, review your insurance coverage, and ensure you’re protected every step of the way.

Whether you’re defending a claim or trying to protect your home, we’re here to guide you through it.