How Insurance Policy Limits Affect Personal Injury Settlements

• While insurance policy limits can impact car accident settlements, they don’t always firmly cap your compensation.
• Worried about what will happen if your damages exceed policy limits? There may be other avenues for financial relief.
• Connect with OakTree Law to protect your rights and pursue the settlement you deserve.

If you’ve been injured due to someone else’s fault or negligence, it’s a mistake to think their insurance company will cover all of your expenses. Too often, insurance policy limits put a cap on personal injury payouts, leaving victims like you with substantial out-of-pocket losses.

Before you start negotiating with insurers, here’s what you need to know.

What Are Insurance Policy Limits?

Expenses relating to car accidents, slip and fall incidents, and other events that result in bodily harm are often covered by insurers. But it surprises some victims to learn that there are almost always insurance policy limits for personal injury claims.

If your damages exceed the personal injury policy limits of the responsible party, your settlement may not pay for your full claim. Here’s a common scenario:

• In a car accident, the driver’s insurance has a $100,000 bodily injury policy limit.
• Even if your damages total $250,000, the insurer isn’t generally obligated to pay more than $100,000.
• That leaves you with a significant shortfall if no additional recovery is available.

Worse yet, many drivers carry far lower limits. In California, car accident insurance policy limits are only required to include $30,000 of liability coverage for bodily injury, and many drivers carry only the minimum.

What Happens if Damages Exceed Policy Limits?

Expenses related to severe injuries, and even those that seem less serious at the start, can be exorbitant. As a result, it’s very common for personal injury claims to exceed policy limits in accidents. When you’ve been hurt, personal injury insurance policy limits may not cover all of your:

• Medical expenses
• Lost wages
• Future medical care
• Pain and suffering

All of that can add up to an alarming amount to manage on your own when car accident insurance policy limits aren’t enough to cover costs.

Fortunately, although insurance limits may impact your personal injury settlement, you are not always limited to the at-fault party’s available insurance.

Other Sources of Compensation

When the at-fault party has insurance policy limits that don’t cover your entire personal injury claim, there are some alternative resources to ensure you don’t bear the excess financial burden.

Uninsured Motorist Coverage (UIM)

Some drivers add coverage to their own insurance policies to hedge against settlement limits in car accidents caused by uninsured or underinsured drivers. While this increases your own premium, carrying UIM can buy peace of mind.

Umbrella Insurance

Umbrella insurance provides extra liability coverage beyond the standard policy settlement limits for personal injuries. If the party responsible for your accident has umbrella coverage, it can substantially increase the available compensation.

Other Potentially Liable Parties to Overcome Personal Injury Insurance Policy Limits

What happens if your damages exceed the policy limits of the party who bears primary responsibility for your accident, and UIM and umbrella insurance aren’t factors? Identifying other potentially liable people or entities may help you secure full compensation.

In a car accident, additional liability may reside with:

• The employer of the driver (if the driver was working).
• Any vehicle owners, separate from the driver.
• The vehicle manufacturer.
• The construction contractor in work zones.
• Any entities responsible for maintaining road conditions.

In premises liability cases, when the property owner’s insurance policy limits your personal injury payout, there may be additional sources of compensation, such as policies held by: 

• Commercial tenants
• Property managers
• Maintenance companies

Lawsuits: Can You Sue Beyond Insurance Policy Limits?

In some cases, you can sue for a settlement that goes beyond personal injury policy limits.

Suing the At-Fault Party

In cases where insurance policy limits won’t cover the full value of your car accident or other injury claim, you can take direct legal action against the responsible party.

However, while the court may award you an excess judgment to cover your damages, you may not actually get paid. That’s because recovering your judgment depends on whether the defendant has assets or other collectible sources of compensation.

Suing the Insurer

This is a more challenging path to pursue, as insurance policy limits for personal injury claims are generally set in stone. However, there are important exceptions. If an insurance company unreasonably refuses to settle a claim within policy limits or mishandles your case, you may consider pursuing a bad faith insurance claim.

Protect Your Personal Injury Claim

Insurance policy limits don’t always determine your maximum compensation. Before you even discuss a settlement from an insurance company, it’s crucial to speak with an experienced personal injury attorney.

One call to OakTree Law can help identify every potential source of compensation and keep you from settling for less than your claim is really worth. Contact OakTree today!