What happens when a car accident claim exceeds insurance limits? To be honest with you, this is not a good situation to find yourself in. However, liability coverage is the part of your car insurance that pays for damage you cause to other people and their property in an accident. A scenario: In the best case, both parties in an accident have full coverage insurance with liability limits of 100/300/100 or even more.
What Happens When a Car Accident Claim Exceeds Insurance Limits?
There are tons of things you will have to keep in mind if your claim exceeds the insurance limits. This means they have $100,000 in property damage liability coverage (at least) and $300,000 per accident along with bodily injury limits of $100,000 per person. These are things you may be able to do if you exceed insurance limits:
- You can file a personal injury lawsuit against additional defendants.
- Through an umbrella policy, you may be able to recover costs.
- You can try to collect from the at-fault driver personally.
The way you approach it depends on your unique circumstances. Get an accident attorney that can help you explore your legal options. An auto collision attorney can help you make your recovery easier, and there are many ways you can get one.
Property Damage Exceeds Insurance Coverage
One of the major coverage types that drivers are required to have by law is property damage liability insurance. Well, insurance covers the cost of damage caused to others, whether you damage their cars, houses, or any other type of personal property. Property damage liability is part of auto liability insurance and bodily injury liability.
If you’re at fault for an accident, the other driver files a claim with your liability insurance policy. Your property damage liability insurance pays for their property damage expenses, such as damage to their vehicle. Their medical bills are covered by your bodily injury liability insurance. Liability insurance can also cover your legal fees if you are sued because of an incident.
What if the at-fault party does not have enough insurance to pay my claim?
If the at-fault party does not have car insurance, you will be able to file a compensation claim with your insurance company. You can also file a lawsuit against the negligent party. However, if you are involved in an accident, the other driver may not have auto insurance, but this is not always the case.
It is not pleasant to always count on other drivers to be insured, and it is important to know what your options are if you get into an accident with someone who lacks coverage. According to the insurance information institute, “78 percent of insured drivers purchase comprehensive coverage in addition to liability insurance, and 74 percent buy collision coverage.”
There are a lot of people who drive without insurance, though, and underinsured drivers, so it is good to explore your options when you have to deal with these types of drivers.
Why do Insurance Companies have policy limits?
To keep costs reasonable, all insurance companies have policy limits. Your insurance company will set insurance limits of liability. The coverage limit, by definition, is the maximum amount that the insurance company will pay out for a single incident or claim. In general, higher limits will result in a more expensive policy.
How Often Do Auto Accident Settlements Exceed the Policy Limits?
Auto accident settlements do not always exceed the policy limits of an at-fault driver’s liability coverage. For this to happen, a jury will need to return a verdict at trial that is more than the insurance limits of the defendant, or the defendant will have sufficient assets to settle the case over insurance limits.
Well, there is also the possibility of an insurance bad faith lawsuit if an insurer fails to protect their insured. Depending on the laws of the state and whether the case constitutes bad faith, the at-fault driver can assign his or her bad faith claim against his or her own insurance company to the plaintiff.
Why Would Car Insurance Deny a Claim?
There are a lot of things that can cause your claim to be denied. Claim denial can be total or partial (the latter occurs when the insurer pays a portion of your claim). Simply put, car insurance denies claims when they believe they have a contractual or legal right to do so. In other words, they believe all or part of the claim is invalid.
What is the Maximum Limit on How Much an Insurance Company Will Cover?
By now, you should know that the highest amount your insurance will pay for a claim is the limit. Well, that is what your insurance policy covers. If you file a claim, your insurance policy will pay up to a certain amount, but you’re responsible for any expenses that exceed the limit.
The coverage limit is the maximum amount that your insurance company will pay on a covered loss. You can know your insurance limit through your policy or by calling your insurance agent.
What are the Types of Insurance Policy Limits?
When reviewing an insurance policy, you may come across various types of policy limits, including:
- Per-occurrence limits: the most a company will pay for a single event/claim.
- Per-person limits: the maximum amount an insurer will pay for one person’s claims.
- Combined limits: a single limit that can be applied to several coverage types.
- Aggregate limits: the total amount that can be paid out for all claims during a period (often a year).
- Split limits: a combination of per-occurrence, per-person, and aggregate limits.
- Special limits: A maximum payout for certain items covered by an insurance policy, such as a valuable piece of artwork on a homeowner’s policy.
Be sure to read the fine print when it comes to policy limits, as they can vary from one coverage type to the next.
