When you’re in an accident, and the other party is found liable, they or their representative must compensate for the resulting damages. This can be complicated when it comes time to get your settlement. In some cases, the damages caused by the crash can exceed the policy limits of the at-fault driver’s insurance policy.
When this happens, it’s common to fear that your settlement payout won’t be enough to cover all your bills and lost wages. Policy limits play a significant role in the amount you will get, and, in rare cases, the settlement can go beyond the policy limits. In this article, we’ll examine how and when this is likely to occur and give you strategies to help if your settlement is in excess of the at-fault driver’s policy limits.
Navigating Settlements Beyond Policy Limits
There are two basic details about insurance you need to know.
A policy is a contract you have with an insurance company to cover the financial losses caused by a car accident.
The policy limit is the maximum amount the insurer will pay after an auto accident. They cover property damage and medical costs up to the agreed-upon dollar amount, but once that amount is reached, they have no legal obligation to pay beyond that.
Policy limits will differ depending on the state you live in and the state-mandated insurance requirements. Liability is the most basic type of insurance, which is a must in almost every state. You can then add more comprehensive insurance to cover you and your vehicle. Choosing a more comprehensive policy will offer you valuable protection and can be required by the insurance company, but in every state, this is an optional add-on to liability and is a more costly option, so many people either opt not to have it at all or pay for bare minimum policy limit coverage.
Understanding Insurance Policy Limits
Three different numbers describe the policy limits for settlements. They cover medical costs per person and per accident and property damages. Coverage uses these three numbers to set limits (the limit is lower or higher depending on what you opt for).
For example, a policy that states 25/50/15 coverage is broken down to mean coverage includes:
- $25,000 for a single person’s medical costs
- $50,000 for multiple individuals in a single crash to share medical coverage
- $15,000 to cover property damage caused by the accident
Once these numbers are met, the insurance company will probably deny any further payments. This also means that a policy stating 50/100/40 will be able to pay more than one that states it is 25/50/15. When damages exceed these numbers, you may seek a settlement that exceeds policy limits.
Uninsured and Underinsured Motorists
If you choose this coverage, your own insurance will help pick up costs when the responsible party’s policy limits are met. If you are in an accident when someone is uninsured or doesn’t have enough to pay you adequate compensation, you may also be awarded a settlement that exceeds policy limits. Just know that your insurance will not want to pay this. You will have to work to get this on top of your policy limit settlement, but it can be helpful.
So, how often do auto accident settlements exceed policy limits?
Cases When Settlements Exceed Policy Limits
The Insurance Research Council states that these occur four percent of the time and only in a few cases. Additionally, most of these settlements exceed policy limits because they go to trial, making it a long and drawn-out process. These are also the circumstances where having a lawyer to assist and argue the case for you is incredibly helpful. Lawyers know these laws better than most and can increase the likelihood of the settlement exceeding policy limits being awarded.
Exceptional Circumstances
When there are exceptional circumstances involved with your settlement claim, you could receive a settlement that exceeds policy limits. Exceptional circumstances for car accident claims most often involve a severe, life-changing injury with lasting effects, including:
- Physical disability caused by injury
- Spinal cord injuries
- Traumatic brain injury (TBI)
- Amputation of a limb
- Severe burns
- Severe fractures
Under exceptional circumstances, you will be able to present medical records that clearly show the injury was caused by the accident. Car accident settlements exceed policy limits when there are exceptional circumstances because of the severity of the injuries.
When you are impaired for life by an auto accident, the at-fault party (or their insurance) is responsible for making sure you can cover the costs of medical treatment, future lost wages, and other continuing costs. You need the higher policy amounts due to the increased impact the injury has on you. Don’t forget that to get higher compensation beyond the policy limits. Documentation is needed to prove you should get more than a policy limit settlement.
Multiple Liable Parties
In certain situations, there will be more than one party that you can hold liable for a car accident. If you were hit by a delivery vehicle or semi-truck, the company employing the driver could also be held responsible for the accident, and they will pay you in addition to the insurance payout. There is also the possibility that the person who owns a vehicle is not the driver when there is an accident and can be held responsible when there is an accident.
Other circumstances involve umbrella coverage that could pay higher amounts than the policy limits established. Companies or other businesses with drivers usually have umbrella coverage, so a business owner isn’t solely liable for an employee’s actions, and this can lead the injured party to get higher compensation that goes beyond normal policy limits.
Bad-Faith Insurance Policies
When an insurance provider does not act in good faith to find adequate resolution in awarding a car accident settlement, they are considered to be acting in bad faith. Insurance companies are obligated to act in a reasonable, fair, and timely manner when they provide coverage and have to settle claims. If they fail to fulfill these obligations in the policy, they are found to have acted in bad faith, and you are entitled to make a claim.
When insurance is found to not uphold its obligations, you can recover more than the policy limits. Bad faith claims result in settlements that exceed the policy limits due to the additional hardships, pain, and suffering that this will cause the injured party, who will be dealing with the additional stress when pursuing their claim.
Strategies for Pursuing a Settlement Beyond Policy Limits
Recovering more than the insurance policy limits will heavily depend on the evidence you have supporting your claim. It will also depend on the actions taken by the insurance company. You can use the evidence you have to negotiate with the insurance provider to leverage your claim and get a settlement surpassing policy limits.
Importance of Evidence and Expert Testimony
The evidence you have is critical. You need to show why you deserve more compensation. You also need to prove the policy amount is not enough to cover your costs. This evidence should include:
- Medical cost summary
- Doctor’s diagnosis and treatment plan
- Medical need for ongoing care
- Lost wages due to medical treatment
- Future loss of wages
- Diminished capacity to do work
- Mental and emotional anguish
- Loss of quality of life
- Property damages
- Expert witnesses and testimony supporting the claim
These factors can be presented to the insurance company or a jury if you end up in court, showing a significant need for an over-policy-limit settlement. It might seem obvious, especially when you have a serious injury, but you still need the proof and the support to win your settlement.
Punitive Damages
These are not often awarded in car accident settlements, but if circumstances warrant it, you may be entitled to punitive damages, which can push your settlement past policy limits. Punitive damages are meant to punish the defendant for behavior that was clearly wrong, like drunk driving, road rage, or street racing. If these were the circumstances of your accident, you may be able to increase your settlement by claiming that you are owed these damages. However, the only way to be awarded punitive damages is to file a lawsuit against the at-fault driver and their insurance company, which has added costs and time to consider as well.
When It’s Time to Think About Hiring A Lawyer
Settlements that exceed the policy limits often require the help of a lawyer. Claiming more than the policy means a lot of legal wrangling and maneuvering. An attorney also has additional resources available. While you can undergo this process yourself, it could be time-consuming and complex.
You can consider taking advantage of a free legal consultation to get a sense of the scope of your case. This way, you can decide what to pursue if you take this on yourself.
Maximizing Your Settlement Within and Beyond Policy Limits
You only get to accept one settlement offer; after that, you cannot pursue the matter further. Make sure you are getting a fair offer, and don’t leave money on the table by pursuing all the ways your claim can pay before accepting anything. To pursue a settlement that exceeds policy limits, knowing what happens when car accident claims exceed the insurance limits is the key to fighting for the settlement you need.
