Policy Limits Settlement: How it Affects Your Personal Injury Claims

If you get injured in an accident that resulted from another person’s negligence, you are liable to get compensation for the damages from the at-fault party insurer. These include compensation for your lost wages, medical costs, property damage, and the loss of your quality of life. In some cases, the amount that you include in your claim may exceed the amount available through the insurance coverage and your underinsured motorist coverage that would be used to pay for the losses. 

However, you need to understand the policy limits settlement basics and the laws governing them to understand how car accident settlements exceed the policy limits. This is not to say that you can’t collect an amount in damages that exceed the limits of the at-fault insurance policy. It is possible in some cases, but it’s usually a daunting task in most cases, which means that you will need to hire a personal injury lawyer to take you through the entire process.  

In this article, we will look at what you need to know about policy limits settlement after your accident. 

What is a Policy Limits Settlement?

The insurance company assumes the responsibility of compensating the injured individual for the damages resulting from the accident that you caused. However, you should understand that it usually comes with a policy limit when you purchase liability insurance. The policy limit refers to the maximum amount that the insurer will pay on behalf of the defendants for the damages resulting from the accident that they caused with their negligence. 

The most reason for concern to victims when accidents happen is finding out how often the accident settlements go beyond the policy limits. Fortunately, cases that receive accident settlements exceeding policy limits are rare, but still understanding the process is important. 

 For instance, if you are injured in an accident, and the defendant’s insurance policy limit is $70,000 for personal injury, that will be the maximum that insurance company is required by law to offer you as a settlement for your damages, even if the cost of the damages exceed the limit in the cover. This will still apply even if the jury awards you an amount that goes beyond the policy limits in court. 

How Insurance Policy Limits Work

Usually, most car insurance policies include: 

  • Property damage insurance policy
  • Bodily injury insurance policy

Bodily injury coverage 

This coverage comes with two limits that limit the insurer’s maximum amount for a single individual’s injuries, and the second limit that limits what the company will pay for injuries resulting from a single accident.  

For instance, 50/100 coverage will limit the bodily injury settlement to $70,000 and $140,000 per person and accident respectively. Apart from this coverage, car insurance policies offer a separate property damage coverage limit, which means that your claim shouldn’t exceed either of the limits since they are separate. 

If you sustain $40,000 in property damage to your vehicle and $20,000 in bodily injury and the at-fault driver has a $30,000 property damage coverage limit and 50/100 in bodily injury coverage, you will receive the full $20,000 in bodily injury since it is below the $70,000 limit set for bodily injury per person. 

Unfortunately, the insurer will not pay for the additional $10,000 for property damage since the amount will be above $30,000, which is the property damage limit. 

Insurance Policies and Limits 

Every driver is required to have car insurance, and these policies come with requirements for specific amounts. For instance, Florida is a no-fault state, but the laws require your PIP insurance to cover bodily injury liability. The minimum requirements for car insurance coverage in Florida include: 

  • $10,000 in Personal injury protection, minimum
  • Property damage liability coverage, minimum

In California, drivers are required to have auto insurance coverage: 

  • $15,000 (minimum) in bodily injury liability coverage and $30,000 per person and accident respectively
  • Uninsured motorist bodily injury coverage $15,000 and $30,000 (minimum) per person and accident respectively
  • At least $5,000 in property damage coverage 

Therefore, the at-fault driver should have at least the coverage mentioned, but some defendants have policies with higher amounts as coverage. 

How Do Policy Limits Affect Settlement?

When the defendant causes an accident, the insurance company should consider all the details involving the case and negotiate with the victim in good faith. The insurer is required to offer a fair settlement to the claim, but the amount should not go beyond the policy limit. 

However, the insurance company aims to cover claims, not paying an amount that exceeds the policy limit. Usually, most policy amounts offered to the injured person are accepted, and only a few cases of significant car accident lawsuits proceed to trial. 

How Often Do Auto Accident Settlements Exceed the Policy Limits? 

As mentioned above, the policy limits determine the amount that the insurance company should offer for damages in case of an accident. It is unusual for a victim to collect injury compensation that exceeds the policy limit. 

However, I would recommend that you approach every situation when differently and involve an experienced car accident lawyer since each case is unique. This will make sure that you get a fair settlement, especially if the limits exceed the policy limits by a huge margin, as it happens in severe accidents.  

Options for Suing Beyond Policy Limits

Usually, insurance companies won’t pay beyond the policy amount. However, in some cases, the victim may be interested in exploring ways that they would use to sue beyond the policy limits. When it comes to suing beyond the policy limits, you should begin with hiring a reliable and experienced personal injury lawyer. Once the personal injury lawyer reviews the policies, claims, and settlement offers on the damages resulting from the accident, they will help you start walking on this tough journey using a number of available options. The options include: 

  • Suing the at-fault driver

If the damages go beyond the amount on the policy limits, you can ultimately decide to sue the driver personally for additional damages that exceed the policy limits. However, before you take this approach, you should first determine whether the defendant has assets to meet the settlement upon judgment. 

  • Suing the Insurer for Not Acting in Good Faith 

An insurance company may also be subject to a bad faith claim when they fail to settle a settlement for damage that goes beyond the policy limits. Once the case proceeds to trial, the jury may award an amount that exceeds the policy limit, which may place the company on the hook to settle the whole amount. 

  • Suing Other Parties Involved 

In some cases, you might sustain injuries in an accident where more than one parties were at fault, which means that you can receive damages from more than one insurance policy. It is also easy to establish other practical options with an experienced attorney and identify other parties that could be potentially at fault. 

  • Umbrella Policy

Some defendants, such as corporate defendants, may have an umbrella, which enables you to collect damages that exceed the policy limits settlement. The policy comes into effect when other policies have paid to the maximum. Therefore, it is recommended that you try to establish the kind of coverage that the at-fault driver has. 

How do you find out the defendant’s insurance limit? 

To find the insurance limit of the at-fault driver, you should send the defendant’s insurance company a letter asking about the bodily injury liability coverage limits. Fortunately, in some states, the driver must have insurance coverage that indicates the limit for their bodily injury liability coverage limit. 

In states like Florida, the insurer is required to disclose to you in writing the BIL coverage limits within 30 days after receiving a written request from the victim. You might also find some drivers without bodily injury liability insurance coverage, which is often the case with most drivers. Luckily, if the defendant doesn’t possess bodily injury liability coverage, you can file a claim under the UM coverage of your car. 

Can You Settle for More Than Policy Limits?

Collecting compensation in excess of the policy limits is not that easy, but this does not mean that it is impossible. The legal system offers you a chance to recover compensation after sustaining injuries in an accident that result from the negligence of another driver.  

However, in severe cases, you might wonder whether you can collect compensation for damages that exceed the insurance policy limits. With an experienced personal injury attorney, you can explore the available options to help you recover additional damages that go beyond the policy limits. Therefore, although policy limits influence the amount you can receive as a settlement for your claim, you are not bound by the at-fault driver’s policy limits. 

Will Insurance Company Pay Policy Limit on Personal Injury Claim?

When it comes to collecting compensation that goes beyond the limit, you need to start with a rock solid demand letter that helps you avoid committing mistakes that frequently offer insurers a chance to argue against your demand. The insurance company may argue that your policy limit demand was defective, which means that it can’t open the policy. 

1. Convince the insurance company this is a liability case

First, you need to convince the insurer and the jury or judge who may choose to read it in the case that the policy limit demand is reasonable. In this case, you should prove the reasonableness of the liability in a way that would make any reasonable insurance company offer a fair settlement to protect the insured. 

The best approach would include attaching investigation reports, copies of police reports and the witness’s identity by telephone numbers and address to enable the insurer to interview them, witness statements. Moreover, you should also include videotape and photographs, as well as anything else that proves a fair and prompt settlement is reasonable and prudent. 

2. The demand must provide a full and final release of all claims

The policy limit demand letter must offer a clear explanation that the plaintiff that provides a full and final release of all claims serves as payment for the policy limit. The offer should not be unequivocal, which means that it should not contain any built-in variables or contingencies. 

 3. Damages will exceed the policy limit 

Provide the insurance company with a full collection of details of the claimant’s damages such as the medical records, reports, x-rays if applicable, business income records, wage loss verification, photographs of damages or injuries. Besides, the evidence should include anything that an insurance company would need to accept that the damages go beyond the policy limit. 

4. Liens included in demand

When writing your demand policy letter, you should make sure that it clearly states that the claimant will be responsible for the reimbursement/payment/satisfaction or compromise of all liens. These include workers’ compensation, medical, property, wage, and attorney fees. Remember, one of the excuses that insurance companies give when they fail to pay settlements within the policy limits is that the letter did not touch on the satisfaction of liens. 

 5. Include wrongful death claim/loss consortium

In a case where the claimant is married, you should make sure that the demand letter allows the release of any loss of consortium claim, which may come with a lawsuit. Likewise, your letter should also agree that the settlement of the policy limit will meet the claims of any party in case of a wrongful death claim. 

6. Clarify demand will not be repeated and set the deadline for the acceptance

The deadline to accept the demand is among the essential components in a policy limit demand but is often a contentious issue in many cases. Therefore, your demand letter should include the deadline highlighted in bold letters to avoid confusion. Apart from having a firm deadline, you should also make sure that you clarify that you will not repeat the demand if the offer is not accepted. 

7. Reminding the insurance company of the impending deadline is not your duty

When writing your demand letter, it is important to clearly state that you will not contact the insurance company to remind them of the deadline or inquire about the status of their investigation. The statement comes in handy during court in the bad-faith case as the insurer may argue that they were set up as they were not reminded about the deadline. 

What if you don’t know the policy limit? 

This is another common challenge, especially when it comes to making a pre-litigation policy limit demand. However, you need to contact the adverse party and inquire about their policy limits because the law does not allow your personal injury attorney to contact prospective litigants directly. 

The other option is asking the insurer to reveal the policy limit, which your attorney can also do. Nevertheless, some insurance companies may refuse to disclose the information with the insured’s consent since policy limits are considered confidential. 


If you sustain injuries in an auto accident, it is advisable to contact a reliable and experienced personal injury attorney. A reliable lawyer can easily determine whether you have a case and help you through the negotiation process to make sure that the insurance company offers a fair settlement. Unfortunately, the damages may exceed the policy limits, which complicates things since insurance companies won’t pay beyond the limits that easily. 


  1. Policy Limits Settlement: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1276634/
  2. https://www.state.gov/vehicle-liability-insurance-requirements/
  3. https://insurance.delaware.gov/wp-content/uploads/sites/15/2018/03/Auto-Insurance-Guide-2018.pdf

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