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What If a Car Accident Claim Exceeds Insurance Limits?

Being involved in an auto accident on California roadways can be devastating. Many people suffer property damage to their vehicles that must be repaired, costing a great deal of money. In more severe cases, a car accident claim can reach thousands of dollars in medical expenses, countless hours in recovery, and mental anguish in the aftermath.

It is not uncommon for the amount of damages resulting from an auto accident to exceed the applicable insurance policy limits. So, what do you do if this happens to you? And exactly how often do auto accident settlements exceed policy limits in California? Let’s explore this issue further.

How Does Car Insurance Work?

Car insurance is a contract between you and an insurance company, where you pay a monthly premium. In return, they reimburse you for damages you suffer in a car accident up to the policy limit. However, policy limits can severely limit your ability to recover your total damages from the at-fault party.

For example, let’s say someone causes a car accident that results in a spinal injury, and your medical bills and lost wages exceed the $15,000 bodily injury coverage provided by the minimum liability insurance. In this case, the car accident claim exceeds policy limits, leaving you with additional expenses the insurance company may not cover.

Understanding Car Insurance Laws in California

The state mandates that all drivers carry insurance and have proof of it in their vehicles. There are several types of insurance accepted by the government, including a standard motor vehicle car insurance policy, a one-time cash deposit of $35,000, a $35,000 surety bond from a California company, or a DMV-issued self-insurance certificate.

If you choose to purchase car insurance, you must have minimum liability coverage of $5,000 for property damages, $30,000 for injury/death to more than one person, and $15,000 for injury/death of one person. While these are the minimum requirements, many people opt for more extensive coverage to protect themselves in the event of an accident.

Can Auto Accident Settlements Exceed Policy Limits in California?

Auto accident settlements exceeding policy limits are relatively rare. Insurance companies are generally not obligated to pay more than the insurance limits in car accidents, so they are unlikely to agree to settlements above policy limits. However, there are some situations where settlements can exceed policy limits.

For instance, if the value of your injuries is higher than the policy limits, the policyholder may agree to pay an additional amount above the limit to avoid a lawsuit. Suppose you have evidence of $25,000 in damages, but the policyholder’s insurance only covers $15,000. In that case, the policyholder may agree to pay an extra $5,000 out of pocket if you agree not to sue them.

What Happens When a Car Accident Claim Exceeds Insurance Limits?

When your car accident claim exceeds insurance limits, you need to explore other sources for compensation. Here are some options to consider:

Filing a Lawsuit Against the At-Fault Party

If your claim exceeds policy limits, you may need to file a lawsuit against the at-fault party to seek additional compensation. However, it’s important to consider whether the at-fault party has the assets to pay you even if you win the lawsuit. Your attorney can advise you on the viability of this approach and whether there are other avenues for recovery.

Uninsured/Underinsured Motorist Policy

If the at-fault party is uninsured or their insurance coverage is insufficient to cover your damages, you may be able to seek compensation from your own uninsured/underinsured motorist policy. This policy is part of your own insurance and covers damages when the other party is uninsured or their insurance is not enough to cover your losses. However, it’s important to note that your own insurer will also scrutinize your claim and look for reasons to deny or limit your compensation.

an insurance claim may exceed the policy limits

Suing a Responsible Third Party

In some cases, multiple parties may share responsibility for your injury. If one party is unable to provide fair compensation, you have the option to file a lawsuit against another responsible party. For example, if you were rear-ended by a driver who was pushed into you by another vehicle, both drivers may share responsibility for the accident. You can sue the driver who hit you directly for their portion of the damages.

How Often Do Car Accident Claims Exceed Policy Limits?

In short, it depends. When negotiations are with an opposing party’s insurer, settlements often do not exceed policy limits.

This is because, in most cases, the insurance company will not have any legal obligation to pay out more than the coverage limits under the policy. However, if you decide to pursue a legal claim against one or more parties who caused your injuries, chances are greater that a potential settlement could exceed any single defendant’s applicable policy limits.

For instance, suppose you were in an accident that involved three defendants, and they all contributed to your injuries, and each only has $30,000 in coverage. Further, suppose that your injuries total $90,000. If you successfully claim against each defendant, you could recover 100% of your damages by adding all three insurance limits.

The Importance of Hiring a Car Accident Attorney

Dealing with a car accident claim that exceeds insurance limits can be complex and overwhelming. To navigate the legal process and ensure you receive the compensation you deserve, it is crucial to hire an experienced car accident attorney in San Francisco, California.

An attorney can help you understand your rights, gather evidence, negotiate with insurance companies, and determine the best course of action to maximize your recovery.

A skilled attorney will assess the circumstances of your case, review your insurance policies, and explore all possible avenues for compensation. They will fight for your rights and ensure that you are not left shouldering the financial burden caused by an accident that was not your fault. With their expertise, you can focus on your recovery while they handle the legal aspects of your case.

Reach out To Our Firm Today

Navigating the aftermath of an auto accident can be challenging, but you don’t have to go through it alone. The San Francisco Lawyers 360 Legal Group is here for you every step of the way.

If you find yourself in a situation where your auto accident settlement might exceed policy limits or if you need assistance in understanding your rights and potential damages, our experienced team is just a phone call away.

Reach out to our firm today at 415-843-7099. We understand the complexities of California auto accident claims and are dedicated to helping you obtain the compensation you deserve.

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