What Happens When a Car Accident Claim Exceeds Insurance Limits?

May 31, 2024

After the accident, every driver worries about insurance compensation. Auto insurance policy limits are an important consideration when filing a claim. Your policy limits are the most your insurer will pay for any person or damage included in the policy and for each accident.

So, what happens when the property damage exceeds insurance coverage? In this case, the insurance company is obliged to pay what it actually owes. If a car accident exceeds policy limits and additional repairs or other compensation is required, you must contact the court.

Factors that affect car insurance rates

Source: Marketwatch

Will Insurance Pay More Than Policy Limits?

What happens if property damage exceeds coverage? In some cases, your insurance company may be willing to agree to an amount exceeding the policy limits (a.k.a. “consent to settle” agreement). In other cases, you must file a lawsuit against the at-fault driver and seek damages. The remaining balance would be owed by the policyholder of the at-fault vehicle.

No matter which path you choose, you will need an experienced attorney to help you navigate the process. It will show you the options available and guide you in finding legal remedies. A typical process would look something like this:

  • Hire a lawyer. Provide all the details: copies of the police report, medical records, photo or video reports from the scene of the accident, and the condition of your car.
  • Contact the at-fault driver’s insurance company and negotiate a settlement on your behalf.
  • Use other insurance coverages. This can be personal injury insurance (PIP) or uninsured motorist insurance if the uninsured driver is at fault. Your attorney will know how to seek auto insurance coverage above the policy limit.
  • File a personal injury lawsuit. This is a last resort but sometimes necessary.

Your lawyer will process all legal documents, limit the issue of car insurance, and present your case in court. It will also help you to get adequate compensation for medical bills, lost wages, and other damages.

How Can I Safeguard My Assets After a Car Crash?

A car accident will inevitably cause embarrassment and an emotional reaction for everyone involved. The more you can control your emotions, the better it is for you when it comes to protecting your property.

Basic rules for responding to an accident:

  1. Call the local police and emergency services. Call 911 as soon as possible if someone is injured in an accident. It is important not to interfere in the process of providing first aid to people without knowledge and experience so as not to harm the victims.
  2. Take several photos of the accident scene and gather evidence of the accident that occurred. Write down your remembrance of the accident. Get all the information you can from other drivers, including their insurance information and names, as well as contact information from any witnesses. Submit accident reports to the local and state authorities as may be required by law.
  3. Report the accident to your insurance company as soon as possible. You will be provided with a consultant to resolve your issue and negotiate with other insurers. If a third-party insurance company contacts you directly, refer them to your insurance company.
  4. Do not admit that you caused or are at fault for the accident. Any statements you make at the scene of the accident can be used as evidence against you and can put your assets at greater risk, as damages are split between the parties.

Why Do Auto Insurance Policies Have Coverage Limits?

The insurance policy limit is the maximum amount your insurance company will pay for any person covered by the policy and for any single accident. Typically, each policy has property damage liability and personal injury liability limits that can range from a few thousand dollars to millions.

Your policy limits depend on the following factors:

  • Type of your coverage
  • Limits set by your insurer
  • Amount of money you are willing to spend on insurance

Policy limits are in place to protect you and your insurance company from financial hardship. They ensure the policyholder is not liable for expenses above the policy limit.

The Fundamental Steps in Settling a Car Accident Claim

After starting medical treatment, hire a traffic accident lawyer to conduct the accident investigation.

They will search for evidence to support your version of events, which may include:

  1. Report the police about the accident
  2. Eyewitness accounts
  3. Photo from the scene of the accident
  4. Traffic or security camera recording
  5. Forensic investigations of accidents

Your attorney’s goal is to find out exactly how the accident happened, who you may hold responsible for your injuries, and what if damages exceed insurance.

The main steps of traffic accident settlement:

  • Determination of responsible parties: Based on evidence from their initial investigation, the attorney will determine who is responsible for your injuries and whether a third party contributed to the accident. For example, the company that manufactured your car may be partially liable if mechanical failure caused the collision. A government agency can share the blame if poor road maintenance leads to the accident.
  • Documenting your injuries: The more detailed your injury records are, the better. Your attorney may use your medical records, receipts, expert testimony, repair estimates, and other evidence to support an injury or insurance claim.
  • Filing an insurance claim: Next, your accident attorney will send a demand letter to the insurer outlining your case against the other driver and the amount for which you are seeking compensation.
  • Settlement negotiations: An insurance adjuster and your attorney will negotiate a potential settlement if the damage caused in an at-fault accident exceeded the policy limits.
  • Accepting an offer or preparing for a test: Upon fair agreement of the lawyer with the insurance company, you will sign it, terminating the claim. But if your deal exceeds the other driver’s policy limits, you’ll need to file a lawsuit to get the money you need back. If you file a lawsuit, your case will move on to the next steps.
  • Discovery: It is a process in which both sides of the litigation share the collected evidence and narrow the scope of the issue.
  • Mediation: Judges often ask the parties to meet with a professional mediator to resolve the issue out of court.
  • Court: If mediation doesn’t work, it’s time for a civil trial. Some civil cases involve a jury, but if both parties can agree to have a judge make the decision alone, it happens without a jury. If you win the case, they will determine your compensation amount. If the other driver wins, you won’t get paid, although you can appeal the decision.

Potential Compensation in a Car Accident Claim

In California, car accident compensation is calculated based on car insurance, medical expenses incurred, legal costs, severity of injuries, lost wages, property damage, pain, and suffering.

Since no two accidents are the same, it is impossible to accurately predict a settlement amount until an in-depth evaluation of all the previously listed elements that may factor into your claim is done.

Here are the average compensation amounts for some common car accident injuries in California:

TraumaAmount of compensation, $
Whiplash5,000–20,000
Mild-moderate concussion20,000–30,000
Knee or shoulder injury30,000–100,000
Broken/fractured bones30,000–100,000
Moderate neck or back injury30,000–100,000
Disc herniation50,000–100,000+
Spinal cord injury or back fracture500,000–1,000,000+
Brain injury100,000+
Severe spinal cord injury/paralysis1,000,000+
Wrongful death1,000,000+

How to Safeguard Your Right to Compensation Following a Car Accident

Here are the steps we advise you to take to increase your chances of getting the right amount of money after the accident:

  1. Call 911 immediately after the accident
  2. Make a photo report of the damage to your car
  3. Look for potential eyewitnesses and surveillance cameras
  4. Seek immediate medical attention
  5. Keep all your medical records and any receipts related to the accident
  6. Do not post information about the accident on social networks
  7. Limit your interactions with insurance companies until you meet with an attorney
  8. Work with a car accident attorney

What Happens When a Car Accident Claim Exceeds Insurance Limits in California?

Although difficult to obtain (depending on the circumstances), excess verdicts are relatively straightforward, awarding “excess” compensation over and above what the insurance policy covers.

For example, if, under the insurance policy of the at-fault driver, the coverage for the accident is only $100,000 and your damages are $150,000, then a jury may award you an additional $50,000. This $50,000 in damages is represented as “excess verdict.”

What happens if damages exceed policy limits? Damages awarded under an excess judgment must be paid by the defendant, and personal property may be subject to attachment under California law in these cases. So, this insurance product covers damages that exceed one’s liability limits.

Do Points on Your License Affect Insurance?

Having points on your license can increase the cost of your car insurance, but only because auto insurance companies look at your driving, not because of the points themselves.

If you have points on your driver’s license due to a DUI or accident, that’s what will increase your car insurance rates, not the actual amount.

In other words, it will be harder to find cheap insurance if you’ve racked up a lot of points on your license. However, not all companies treat driving violations the same, and some violations may not affect your rates as much as others.

Here’s a table showing license points for some states that use a point system:

Violation TypeCAFLMINJNYNCOH
Average car insurance rate$1,937$2,961$2,438$2,304$2,197$1,019$1,096
Driving with a suspended license+142%+46%+88%+96%+56%+211%+78%
Driving with an expired registration+41%+17%+17%+27%+5%+42%+28%
Driving without Lights+37%+16%+19%+26%+8%+42%+27%
DUI+172%+42%+163%+86%+70%+347%+79%
Failure to show documents+41%+17%+17%+27%+5%+37%+28%
Failure to stop at a red light+45%+17%+24%+32%+8%+43%+28%
Failure to yield+45%+17%+22%+32%+8%+43%+28%
Following too closely+45%+17%+34%+44%+8%+58%+28%
Hit and Run+150%+48%+158%+83%+66%+342%+80%
Illegal turn+45%+17%22+%+33%+8%+43%+28%
Improper passing+45%+16%+39%+40%+8%+57%+29%
Passing a school bus+47%+15%+38%+46%+9%+95%+31%
Racing+160%+42%+134%+90%+42%+371%+80%
Reckless Driving+161%+49%+155%+85%+42%+95%+76%
Speeding Ticket+43%+26%+46%+46%+32%+50%+30%

This table shows the same driving violations and how they can affect your car insurance in each state.

So, when choosing an insurance company, you need to compare rates to see which companies have the best rates for people with your driving experience – regardless of how many points you have.

Frequently Asked Questions

Who is the most risky, according to auto insurance companies?

Even the top-notch auto insurance companies considering high-risk applicants see young drivers as potentially problematic, which is why they charge high premiums for this group. According to our data, the average rate for comprehensive car insurance for teenagers in the US is $5,298/year or $442/month.

What happens if someone sues you for more than your insurance covers in Georgia?

This can happen, but car accident compensation rarely exceeds the insurance company’s policy pay limits. To receive monetary compensation for an injury that exceeds the minimum amount of the car insurance policy, including additional coverage for pain and suffering, the victim has several options:
If the victim of the accident has an uninsured driver or insufficient insurance to cover the costs, the lawyer can file a claim through the victim’s insurance policy to obtain additional compensation that exceeds the minimum insurance policy of the at-fault party.
Try to get compensation from the personal assets of the insurance company of the person responsible for the accident. 
 
Unfortunately, if the personal assets of the at-fault driver are insufficient to cover all medical expenses and damages, or if the at-fault driver files for bankruptcy, the victim of a car accident may not be able to receive additional compensation.

What happens when a car accident claim exceeds insurance limits in Florida?

Although Florida law requires all vehicle owners to have insurance, most drivers choose to take out the minimum amount. That’s often not enough to cover medical expenses and damages after a car accident. Therefore, the question remains relevant: “What happens if your car insurance doesn’t cover an accident?”
When this happens, hiring an experienced car accident attorney is critical. You may have to go to court and file a lawsuit to get the money you deserve. Or you may need to use your insurance policy. 

What happens if someone sues you for more than your insurance covers in Florida?

When drivers receive a claim against them for an amount that exceeds the limit of their liability insurance policy, their auto insurers cover legal fees and damages up to the amount required under the terms of the policy.
So, a driver who caused someone $155,000 worth of injuries and had $15,000 worth of personal injury liability coverage would only get $15,000 from their insurer, leaving $140,000 in uncompensated damages for the accident victims.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at Phonexa.com and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.

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