One of the most common questions Doug Bailey gets as a personal injury lawyer is “why do we have to settle for policy limits? My claim is worth a lot more than the measly $25,000 of insurance coverage the idiot who hit me carries.”
There are a few ways a personal injury lawyer might answer this question, but first understand that the lawyer probably agrees with you and wishes the idiot who hit you carried a lot more than $25,000 in coverage!
Unfortunately, you may well be limited by that coverage limit, or what we call “policy limits.” And we should probably start there, with a definition and some background information before we can answer the question of why we might be limited.
What are Policy Limits?
Policy limits in an auto insurance policy refer to the maximum amount of money that an insurance company will pay out for a covered claim. You’ve probably seen them in your own policy’s Declarations Page. The limits are typically expressed as two numbers separated by a forward slash, such as 25,000/50,000, 50,000/100,000, or 100,000/300,000.
The first number in the policy limits represents the maximum amount that the insurance company will pay out per person who is injured or killed in an accident. The second number represents the maximum amount that the insurance company will pay out for all injuries and damage resulting from the accident, regardless of the number of people involved.
For example, if a policy has limits of 100,000/300,000, and four people are injured in an accident covered by the policy, the insurance company will pay up to $100,000 per person, but will not pay more than $300,000 in total for all claims resulting from the accident.
Why won’t the insurance company pay more than Policy Limits?
In too many cases, the injuries after an accident are severe and the medical expenses are high. In fact, it’s not uncommon for the medical expenses to exceed the policy limits in some cases. So you’re right to ask why the insurance company shouldn’t pay more.
The reason is that they’re not legally obligated to pay more, and so they don’t. And really, if you think about it objectively, they probably shouldn’t. If insurance companies paid more for claims than what they were obligated to, they would go out of business. Their business model is built on assuming levels of risk depending on how much their customers are willing to pay per month (the premium). The amount of the premium determines the amount of coverage. You get what you pay for, so to speak. If you can only afford the lowest premium available, then you’re going to get a low amount of coverage. This is all spelled out in the insurance policy, which is a legally binding contract. Both parties must abide by the terms of this contract, and it would not make sense from a business perspective if the insurance company went beyond the contract and paid more for your claim than they’re contractually obligated to.
Is there any way to get more than the Policy Limits?
We’ve established that you won’t get more than Policy Limits from the insurance company, because they will only pay what they’re required to pay in the contract. Having said that, there is a possibility that you can get more than Policy Limits, albeit slight.
If the damages from the accident exceed the policy limits, the at-fault driver may be held personally responsible for the additional damages not covered by their insurance policy. In this case, you may be able to pursue additional compensation through a personal injury lawsuit against the at-fault driver.
It's important to keep in mind, however, that pursuing legal action can be a lengthy and complicated process, and there is no guarantee of success. What’s more, even if you are successful in the lawsuit against the at-fault driver, there may be difficulties in collecting the money. If the at-fault driver was carrying insufficient insurance coverage, they probably don’t have tens or hundreds of thousands of dollars to pay your medical expenses or make up for what you’ve lost as a result of your injuries. You can’t squeeze blood from a turnip, as the saying goes.
Your final option is to check your own insurance policy to see if you have underinsured or uninsured coverage. If so, you might be able to make a claim with your own carrier.
How Bailey | Stock | Harmon | Cottam | Lopez Can Help
If you’ve been injured in a car accident or trucking accident, it’s a good idea to work with experienced legal professionals who can guide you through the process and pursue all avenues to make sure you’re compensated to the extent possible.
Next, review your own insurance policy and consider adding additional coverage to ensure that you are adequately protected in the event of an accident.