You may be wondering, “How often do auto accident settlements exceed the policy limits?” It is rare for a settlement stemming from a car accident claim to exceed the policy limits. In fact, this only happens about four percent of the time, according to an Insurance Research Council report.
While it is rare for settlements to exceed insurance limits, there are a lot of car accidents. Four percent of a lot is still a lot. So, it is important to know how a settlement can exceed the policy limits and what happens when it does.
This article will answer many common questions about this topic, such as:
- What happens if medical bills exceed policy limits?
- What is a policy limits settlement?
- What happens if a car accident exceeds policy limits?
- What happens when a car accident claim exceeds insurance limits?
Auto Insurance Policy Limits in California
First off, it’s vital to understand that California has requirements for the coverage you purchase from an insurance company. Residents of California who drive are required to carry a minimum amount of coverage. If you wish to drive a vehicle in California, that vehicle needs to be insured in a way that meets California’s minimum coverage requirements.
The current minimum coverage requirements in California are:
- $15,000 to cover death or injury to a single person
- $30,000 to cover death or injury to multiple people
- $5,000 to cover property damage
However, effective January 1, 2025, these requirements will be increased to:
- $30,000 to cover death or injury to a single person
- $60,000 to cover death or injury to multiple people
- $15,000 to cover property damage
These are simply California’s requirements. Additional coverage might be required by lenders.
To grasp how likely it is for a settlement to exceed the applicable insurance policy limits, it’s vital to know how an insurance policy limit is defined. A policy limit is the maximum amount of money that an insurer will pay out when an accident occurs. As an example, when a policy limit is set to $100,000, the insurers won’t pay any more than $100,000 regarding injuries and damages caused by an accident.
A lot of the time, settlements do not exceed policy limits. However, sometimes settlements end up exceeding policy limits. A personal injury claim can lead to a settlement exceeding the policy limits for numerous reasons, such as injury severity, the amount of medical expenses, how much property damage occurred, and the liability’s extent. When a settlement in a personal injury lawsuit exceeds policy limits, the injured victim could be saddled with unpaid damages or expenses.
Car accident claims lead to settlements exceeding policy limits about four percent of the time. What this means is that four percent of the time, the settlement that a victim is awarded is larger than the insurer’s set policy limit. How often settlements will exceed policy limits depends upon accident severity. Settlements are more likely to exceed policy limits when accidents involve severe injuries or fatalities than when accidents simply involve minor injuries.
What If Car Accident Damages Exceed Policy Limits?
If your accident claim surpasses insurance limits, you may end up being personally liable for any additional damages.
This means that you might be financially liable for paying the remaining damages out of pocket. This could lead to financial strain.
Should you settle with the at-fault driver’s insurer, you will end up releasing the at-fault driver from additional liability. Additional options exist when it comes to damages exceeding the policy limits.
Settling With an At-Fault Driver
It might be possible for you to come to a settlement which includes an insurer agreeing to a policy limits settlement demand as well as the at-fault driver coming to an agreement to cover the remainder of your damages out of their own pocket. This can only occur if assets exist which can cover the discrepancy.
You can also take your case to trial if you require additional compensation for your injuries. Contact an experienced personal injury attorney at our firm today if this applies to you.
Underinsured Motorist Coverage
Your own insurance may include uninsured motorist/underinsured motorist coverage, also known as UM/UIM coverage. This coverage protects you when you are struck by a driver who doesn’t have auto insurance, or who has auto insurance which is not sufficient to cover all of your injuries or damages.
If the at-fault party’s insurance policy isn’t large enough to cover your damages, underinsured motorist bodily injury coverage, or UIMBI, might pay for medical bills for you as well as your passengers. In addition, underinsured motorist property damage, or UIMPD, might pay for any damage your vehicle sustains.
Multiple Liable Parties
Sometimes, car accident cases involve multiple liable parties. Examples of this include:
- When employers are partially responsible: When at-fault drivers in accidents are on the job when the accidents happen, their employers may be partially liable for damages sustained in the accidents. So, if you’re hit by a truck driver or Amazon driver, you might be owed a payout by their employers.
- When local or state governments are partially responsible: When a dangerous roadway condition causes an accident, and that dangerous condition should have been fixed by a local or state government but wasn’t, a local or state government may be partially liable for the costs of your accident.
- When multiple drivers are partially responsible: Sometimes, multiple drivers might be partially liable for an accident. When this occurs, you can receive compensation from both drivers’ policies.
Car accidents claims get very complex when multiple liable parties are involved. It’s vital to consult a lawyer if you’re involved in any of the above situations. An attorney can help you navigate the legal process. Call us today for a free consultation if any of the above situations apply to you.
Umbrella Policies
If the at-fault driver carries an umbrella policy, it may be possible for you to collect additional damages from said policy. An umbrella policy will come into play once the policy limits have been paid out by other policies.
Common Damages That Could Exceed Policy Limits
Compensatory damages is the category of losses which is most commonly recovered in claims involving car accidents. What this means is that accident victims typically recover financial compensation for the losses and expenses they incurred because of accidents. For this reason, certain injuries are a lot more likely to end up leading to settlements which exceed policy limits when compared to other injuries, including:
- Serious, lifelong impairments and injuries
- Traumatic brain injuries
- Spinal cord injuries, including paralysis
- Severe burns
- Lost limbs
Injuries which require nursing care, at-home support, inpatient rehabilitation, surgeries or significant hospitalization can quickly lead to costs which exceed most policy limits.
Conversely, it’s not likely that you will end up with a settlement exceeding policy limits after an accident you recover from within weeks and don’t need long-term support and inpatient care for.
Time Limits to File a Car Accident Case
There is a time limit to file a case after you’ve been injured in an accident in California. This time limit is usually two years from the date of the accident and is known as a statute of limitations.
However, there are exceptions to this two year time limit. Certain exceptions lengthen the time limit and other exceptions shorten it. One example of an exception which shortens the time limit is when a government entity is liable for damages, such as when an accident is caused by a defective road. In cases such as these, the time limit is shortened to just six months.
Call us today for a free consultation to find out if you still qualify to file a case, and to get the full compensation you deserve after being injured in an accident.
Get Help From a California Car Accident Attorney Today
If you’ve been injured in an accident, and especially if you have suffered a lot of damages which you think may exceed the policy limits, it’s vital to contact an experienced car accident lawyer today if you wish to be able to recover the most compensation possible.
Insurance companies will not offer you anywhere near what you deserve after an accident unless you have a lawyer. This is because insurance companies know that the only way you can force them to offer you what you’re entitled to under California law after an accident is to sue them over a low ball offer and win that lawsuit. The insurance companies know you can’t win such a lawsuit without a lawyer, so they’ll only offer you low ball offers if you don’t have an attorney.
It’s also important to have a lawyer to talk to insurance companies for you. Insurance adjusters are trained to manipulate you into saying things which can devalue your claim. Experienced accident lawyers like the lawyers at our firm won’t fall for these tricks.
If you can’t afford treatment for the injuries you sustained in an accident, our law firm can get you to doctors who will treat you without charging you for treatment until your case is over. The reason doctors do this for our clients is our reputation for success.
We have been representing car accident victims for 1990, helping many car accident victims recover settlements which exceed policy limits. We have recovered in excess of $750,000,000 for our car accident clients and other clients. Our vast experience will allow us to recover the most compensation possible for you after your car accident.
We will represent you without charging you any fee until and unless we recover compensation for your accident injuries. Our only fee is a percentage of the compensation we recover for you, meaning you won’t be charged an upfront fee or out-of-pocket fee.
Call us today for a free consultation if you or a loved one has been injured or killed in a car accident in the State of California.
Jeffrey Nadrich
Jeffrey Nadrich is a nationally-recognized California plaintiff’s personal injury attorney. He is a graduate of UC Berkeley and UC Hastings College of the Law. He has successfully represented thousands of injury clients over the last 40 years.
