Can an insurance company garnish my wages or tap into my Roth IRA?

The other person [or their insurance carrier filing for them] has to first get a judgment by filing a suit and then getting a court judgment. That can easily take more than 6 months. Then get then garish your wages but only above a certain amount. I do not know if they can go against the Roth IRA but I suspect they can not because it could sit in your account until you are passed age 65. You should have been told that that type of insurance only covers your own medical bills and not any damages you cause anyone. If you were not told that, you might have a cause of action against the insurance broker who sold you the policy.

If the insurance companhy wins a judgment against you, they could garnishee your wages. A Roth IRA is probably exempt from a garnishment. Your choices seem to be: (1) to defend the lawsuit and win; (2) to settle with the insurance company to pay an agreed amount monthly; or (3) to file a bankruptcy (so long as the accident did not involve drunken driving on your part).

You should speak with a attorney immediately, generally they can garnish your wages if there is a judgment but your IRA is generally exempt from collection action. You may have to consider bankruptcy.

Read your policy carefully. If you have an indemnity policy, it will protect you from suit be a third party, up to the limits of the policy. If you are not sure, call the company. If you have an indemnity policy, you need to report the accident and the claim from the other party, and do it promptly. An insurance company can refuse to protect you if your inaction prejudiced their position. I firmly believe that you are better off reporting the claim to avoid that problem. I also recommend that you talk to a competent insurance salesperson, and get a decent policy of auto insurance. You want to protect yourself up to at least $300,000 if you get sued by someone else. You also want at least the same amount of coverage if the person who collides with you has no insurance, or a smaller policy than that. You want rental car coverage while your car is being repaired, and you want decent coverage for your medical bills, lost wages, etc. If you don't look out for yourself, no one else will.