How Often Do Auto Accident Settlements Exceed the Policy Limits

how often do auto accident settlements exceed the policy limits

The injured party in an auto accident must deal with damages to or the total loss of their vehicle. In more severe accidents, they have physical injuries to contend with and related medical costs and lost wages. They also face the burden of filing claims and dealing with insurance policies to recover damages due to them.

Fortunately, the driver causing the accident usually has insurance. Also, insurance companies overwhelmingly settle these claims. However, the settlements generally will not exceed policy limits. Therefore, the injured driver has additional challenges if their claim exceeds the policy limits.

Insurance Policies and Limits

The law mandates that drivers have automobile insurance. These policies have requirements for specific amounts. For instance, California requires drivers to carry at least the following auto insurance coverage: 

  • Bodily injury liability coverage of $15,000 per person/$30,000 per accident minimum; 
  • Property damage liability coverage of $5,000 minimum; and
  • Uninsured motorist bodily injury coverage of $15,000 per person/$30,000 per accident minimum.

The driver who causes injuries should at least have the coverage above. Some drivers have policies over these amounts. The coverage they have is most often the maximum settlement amount their insurance company will offer an injured driver.

Impact of Policy Limits

Insurance companies are required to negotiate in good faith with an injured person and take into account all the details of the case. The long-accepted industry standard is that a fair settlement to a claim is up to, but not above, the policy amount. 

The point of insurance is to cover claims. Companies do not intend to pay beyond the policy. Settlements for policy amounts are usually accepted. Only about 2% of the small number of major motor vehicle lawsuits that get filed in California go to trial. 

Options for Suing Beyond Policy Limits

The first step the injured party should take is to hire a lawyer. An experienced personal injury and auto accident attorney can review all claims, policies, and settlement offers relating to an accident. Although it may be difficult to obtain a settlement or award in excess of the insurance policy limits, there are a few options.

Suing the Insurance Company for Failing to Act in Good Faith

When an insurance company refuses to settle for the policy limit where the damages clearly exceed the policy limits, they may be subject to a bad faith claim. If the case later goes to court and a jury awards damages in excess of the policy limit, the insurance company may be on the hook for the whole amount.

Suing the At-Fault Driver Personally 

If your claim exceeds policy limits, you may seek to ultimately sue the driver at fault for additional damages not covered by the policy limits. Whether you should take this approach rather than settling for the policy limits will depend on whether the at-fault driver has assets from which you could collect a judgment.

Suing Other At-Fault Parties

If more than one party was responsible for your accident, you may be able to collect damages under more than one insurance policy. An attorney can help you identify other potentially responsible parties.

Contact the Attorneys at Startpoint, LC

Starpoint LC, Attorneys at Law, is a boutique personal injury law firm serving Los Angeles and its surrounding areas. For your injury case, Starpoint Law will always provide the highest quality legal services. Contact Starpoint Law today.

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