How Insurance Policy Limits Affect Personal Injury Claims

In personal injury claims, understanding how insurance policy limits impact the compensation you can receive is vital. Essentially, insurance policy limits are the maximum amount an insurer will pay for a covered loss. They play a significant role in determining the outcome of personal injury claims, whether the injury is from a car accident, a slip and fall, or any other incident caused by someone else’s negligence.

If you believe you may have a personal injury case, the attorneys at Cellino Law are here to help. You can review your options by scheduling a free consultation online or by phone at 888-888-8888.

Key Takeaways

• Insurance policy limits can affect how much compensation may be available after an accident.
• A claim may involve per-person limits, per-accident limits, or more than one insurance policy.
• If the at-fault party’s coverage is not enough, other options may include SUM coverage, UM coverage, or an umbrella policy.
• Understanding the available insurance coverage can help a person avoid accepting a settlement before knowing all of their options.

Understanding Insurance Liability Policy Limits

Insurance policies usually have two main limits that can affect a personal injury claim: per-person limits and per-accident limits. These liability policy limits explain how much the insurance company may pay based on the facts of the claim.

Per-Person Limit

The per-person limit is the most an insurance company will pay for one person’s injuries in an accident caused by the insured person. For example, if the at-fault driver has a bodily injury liability limit of $50,000 per person, the insurance company may pay up to $50,000 for one injured person’s claim.

Per-Accident Limit

The per-accident limit is the most an insurance company will pay for all people injured in a single accident. As an example, if a policy has a per-accident limit of $100,000 and several people are injured in the same crash, the total payout for everyone cannot exceed $100,000. This remains true regardless of the number of people involved or the severity of their injuries.

These limits can apply to many types of liability insurance, including auto insurance, homeowners insurance, renters insurance, and commercial insurance.

Types of Insurance Coverage That May Affect Personal Injury Claims

Several types of insurance may apply to a personal injury claim, with the type of coverage depending on how and where the accident happened. These coverages can include: 

• Auto Insurance: In motor vehicle accidents, auto insurance typically plays a crucial role. This may include bodily injury liability coverage, property damage coverage, and uninsured/underinsured motorist coverage.
• Homeowner’s or Renter’s Insurance: In cases where an injury occurs on someone else’s property, the homeowner’s or renter’s insurance policy could cover medical expenses and all damages resulting from the injury.
• Commercial Insurance: If you’re injured on commercial property or due to a business’s operations, the company’s commercial liability insurance may be responsible for covering your damages.
• Umbrella Insurance: Some people and businesses carry umbrella policies. These policies may provide extra coverage above the limits of a standard policy.

Each policy has its own limits that can directly affect the amount of compensation available in a personal injury claim.

How Policy Limits Impact Settlement Negotiations

Insurance policy limits set the maximum amount an insurance company can pay for a personal injury claim. These limits can have a major effect on settlement negotiations. 

Even if your medical bills, lost wages, or other damages are higher than the available coverage, the insurer is generally only responsible for paying up to the amount listed in the policy.

Maximizing Recovery Within Policy Limits

If the at-fault party’s insurance policy limits are sufficient to cover your damages, negotiations typically focus on getting the full amount you’re entitled to within those limits.

 If your damages amount to $40,000, for example, and the per-person policy limit is $50,000, there is room to negotiate a settlement that covers all of your losses.

Strong documentation can be used to help support your claim. Medical records, bills, wage records, photos, witness statements, and expert opinions may all be used to show the value of your damages.

When Damages Exceed Policy Limits

If your damages exceed the available policy limits, the insurance company may offer to settle for the full amount of the policy limits. This is common in cases involving serious injuries, long-term treatment, or wrongful death.

If the insurance coverage is not enough, you may need to explore other ways to recover compensation. This may include utilizing your own uninsured or underinsured motorist coverage, an umbrella policy, or filing a claim against another responsible party.

What Happens When Your Damages Exceed Policy Limits?

If your damages are greater than the policy limits, there may still be other options. The best choice depends on the facts of the case, the type of accident, and the insurance coverage available. Here are some common avenues to consider:

Underinsured Motorist Coverage (UIM) or Supplementary Underinsured Motorist Coverage (SUM)

If your injury happened in a car accident and the at-fault driver does not have enough insurance, your own UIM/SUM coverage may apply. This type of coverage can help cover the difference between the at-fault driver’s policy limits and your damages. The amount of coverage is up to your own policy limits.

For example, if the at-fault driver has $25,000 in coverage and your damages are worth $100,000, your UIM/SUM coverage may help cover part of the remaining loss. This is dependent on your own policy and the amount of UIM/SUM coverage you have.

Uninsured Motorist Coverage (UM)

In cases where the at-fault driver has no insurance, UM coverage helps to protect you. This type of coverage allows you to seek compensation through your own insurance company when there is no available insurance from the responsible driver. Essentially, it replaces the role of the other driver’s insurance, acting as a crucial safety net.

Umbrella Insurance Policies

Some individuals and businesses carry umbrella insurance. These policies provide extra liability coverage in addition to the main insurance policy.

For example, a business may have a commercial liability policy with a $500,000 limit and an umbrella policy that provides an extra $1 million in coverage. If the damages are higher than the main policy limit, the umbrella policy may provide greater compensation.

Suing the At-Fault Party Directly

In some cases, you may be able to directly sue the at-fault party for damages above the insurance policy limits. However, this can be difficult. Many people and businesses may not have enough money or assets to pay a large amount beyond their insurance policy limits.

Before choosing this path, it is important to consider the cost, time, and likelihood of collecting payment.

Bad Faith and Insurance Policy Limits

Insurance companies are required to handle claims in good faith. This means they must properly review claims and consider fair settlement offers within policy limits when appropriate.

If an insurance company refuses to settle a claim within policy limits without a valid reason, there may be a bad faith issue. In some cases, the insurer may become responsible for damages that go beyond the policy limits.

A bad faith case may involve questions about whether the insurer:

• Investigated the claim properly
• Responded to settlement demands
• Protected its insured from a judgment above the policy limits

Because bad faith claims can be complex, it is important to have an attorney review the insurance company’s actions and determine whether additional legal options may be available.

Steps to Take When Dealing With Insurance Policy Limits

When pursuing a personal injury claim, it’s important to be proactive about understanding the insurance policy limits involved in your case. This involves some key steps, such as:

• Determine the at-fault party’s policy limits: Find out how much insurance coverage the at-fault party has. An attorney can help request this information.
• Evaluate your own coverage: Review your own policy for uninsured motorist coverage, SUM coverage, no-fault benefits, or an umbrella policy.
• Consult with an attorney: A personal injury attorney can review the available coverage, explain your options, and help with settlement negotiations.

Following these steps can help you better understand the available coverage and avoid accepting a settlement before knowing all of your options.

Injured? Call Cellino Law

Whether the injury occurred in a car accident, on someone’s property, or in a commercial setting, understanding the insurance policy limits and how they affect your claim is essential for obtaining fair compensation.

If you’ve been injured in a car accident, you know who to call. The team at Cellino Law is here to answer any of your questions and help you to navigate the claims process after an accident. For a free case consultation, call us at 888-888-8888.