What Happens When Car Accident Claim Exceeds Insurance Limits?

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Posted By | February 19, 2024 | Car Accidents

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When you’re involved in a car accident, the last thing you want to worry about is money. Unfortunately, if the damages or medical bills exceed the at-fault driver’s insurance limits, financial concerns quickly come to the forefront. This guide explains what happens in such situations and how to protect yourself.

Factoid About Car Accidents in 2023

Car Accident Stats Summary

Statistic Number Detail
Fatal Accidents (2020) 35,766
Injury Crashes 1,593,390
Property Damage 3,621,681
Total Collisions 5,250,837
Impaired Driving Fatalities 13,695 35%
Speeding Fatalities 11,258 29%
Unbelted in Fatal Accidents 46% drivers, 47% passengers
Night Fatal Accidents 35% (6 pm – midnight)
Deadliest Day 134 collisions July 4
Teens with Alcohol in Fatal Accidents 29%
Seniors Died in Accidents 6,500
Male vs. Female Fatalities 28,033 males, 10,690 females
Uber-related Fatalities 42

Overview of Car Insurance Claim Limits

Car insurance policies come with limits—caps on how much the insurer will pay for a single accident.

These limits are crucial because they determine the maximum amount available for damages and injuries.

For example, if a policy has a $50,000 limit per person for bodily injury, that’s the most the insurance will cover for an individual’s injuries.

Importance of Understanding Insurance Policy Limits

Understanding your insurance policy’s limits is essential. It helps you know what financial protections you have in place and where you might be vulnerable.

For instance, if your policy covers up to $100,000 for property damage and you total a car worth $150,000, you’re on the hook for the difference.

Brief Explanation of the Scenario When Claims Exceed Limits

When claims exceed insurance limits, the at-fault driver may be personally responsible for the excess amount. This situation can lead to financial strain, as the driver might have to pay out of pocket.

For the not-at-fault party, it means seeking compensation beyond the insurance payout, possibly through personal assets of the at-fault driver.

Understanding Insurance Policy Limits

Insurance policy limits play a pivotal role in determining how much coverage you have in the event of a car accident. These limits are the maximum amount your insurance company will pay for a single incident.

Understanding these limits is crucial for every driver, as they directly impact claim payouts and personal financial responsibility.

Definition of Insurance Policy Limits

Insurance policy limits are the caps set by your insurance policy on the amount it will pay for different types of claims.

These limits are usually divided into categories such as bodily injury per person, bodily injury per accident, and property damage per accident.

For example, a common policy structure might be 100/300/50, meaning $100,000 for bodily injury per person, $300,000 for bodily injury per accident, and $50,000 for property damage.

Types of Limits

  • Per Person Limit is the maximum amount the insurer will pay for one person’s injuries in an accident.
  • Per Accident Limit applies to the total payouts for all injuries in a single accident.
  • Property Damage Limit is the maximum amount paid for damage to property in an accident.

How Limits Affect Claim Payouts

The limits of your insurance policy directly affect how much money can be paid out in the event of a claim.

If the costs of an accident exceed these limits, the at-fault driver may be personally responsible for the difference. This situation underscores the importance of selecting appropriate coverage limits when purchasing insurance.

It’s a balance between protecting your financial assets and managing premium costs.

The Process After a Claim Exceeds Limits

When a car accident claim exceeds the insurance limits, both the at-fault driver and the victim face a complex situation.

This part of the guide delves into the steps and considerations involved when dealing with claims that surpass the policy’s coverage boundaries.

Initial Steps to Take When Informed Your Claim Exceeds Limits

When you’re informed that your car accident claim exceeds your insurance limits, it can feel like you’re suddenly navigating through a storm without a compass.

Here’s a guide to help you understand what to do in this challenging scenario.

  1. Review Your Insurance Policy
  2. Contact Your Insurance Agent
  3. Consult with a Legal Professional
  4. Assess Your Financial Situation
  5. Explore Payment Arrangements
  6. Consider Additional Insurance Coverage

Being informed that your claim exceeds your insurance limits is not the end of the road. By following these steps, you can navigate through the aftermath with a clearer understanding and a plan of action.

Role of Insurance Companies in Claims Exceeding Limits

Insurance companies play a significant role in this process.

They will negotiate with the other party’s insurer or legal representative to settle the claim within the policy limits when possible.

However, if the claim amount is firmly beyond the policy’s coverage, the insurance company will pay up to the limit and then notify you of your liability for the remainder.

Legal Obligations of Parties Involved

The at-fault driver may face legal obligations to cover the excess amount out of pocket.

This could involve personal assets or future earnings, depending on the severity of the damages and the legal outcomes.

For the not-at-fault party, pursuing additional compensation may require legal action to claim damages directly from the at-fault driver’s personal assets.

Financial Implications for the At-Fault Driver

When an insurance claim exceeds the policy limits, the at-fault driver faces significant financial implications. This section explores the potential financial responsibilities and the impact on the at-fault driver’s financial situation.

Personal Liability and Financial Exposure

The at-fault driver becomes personally liable for any amount that exceeds their insurance coverage.

This means if the insurance policy covers up to $100,000 but the damages amount to $150,000, the driver is responsible for the $50,000 difference.

This financial exposure can affect personal assets, savings, and even future earnings.

Potential for Wage Garnishment and Asset Seizure

In cases where the at-fault driver cannot pay the excess amount immediately, the court may order wage garnishment or asset seizure.

Wage garnishment involves a portion of the driver’s earnings being directly taken to satisfy the debt.

Asset seizure could mean losing valuable possessions or property to cover the outstanding amount.

Impact on Future Insurance Premiums

Exceeding insurance limits can also lead to a significant increase in future insurance premiums.

Insurers view drivers who have been involved in costly accidents as high-risk, which often results in higher costs for obtaining insurance coverage.

This can further strain the financial situation of the at-fault driver, making it more challenging to afford adequate insurance coverage in the future.

Options for the Not-At-Fault Party

When a car accident claim exceeds the at-fault driver’s insurance limits, the not-at-fault party may find themselves facing unexpected challenges in obtaining full compensation. This section outlines the avenues available to those seeking to recover the full extent of their damages.

Pursuing Compensation Beyond the At-Fault Party’s Insurance Limits

The primary option for the not-at-fault party is to pursue compensation beyond the at-fault driver’s insurance limits. This can involve filing a claim against the driver’s personal assets.

While this route can provide additional compensation, it often requires legal action and can be time-consuming and complex.

Understanding Underinsured Motorist Coverage

Underinsured motorist coverage is a part of your own insurance policy that can protect you if you’re involved in an accident with a driver whose insurance limits are too low to cover your damages. This coverage can fill the gap between the at-fault driver’s insurance payout and the total cost of your damages, up to the limits of your own policy.

Filing a Lawsuit Against the At-Fault Driver

If the at-fault driver’s insurance and personal assets are insufficient to cover your damages, filing a lawsuit may be necessary. This legal process can help you claim compensation directly from the at-fault driver.

However, it’s important to consider the financial viability of this option, as the at-fault driver’s ability to pay the awarded amount can vary.

If you’re facing the complexities of a car accident claim that exceeds insurance limits, you don’t have to handle it alone.

Carew Garcia Bohuslav Law is here to provide you with the dedicated legal representation you need.

As experienced Dallas Car Accident attorneys, we’re committed to helping you secure justice and compensation.

Call us today at (214) 227-2220 to discuss your case and explore your options.