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When and how auto accident settlements can exceed insurance policy limits

When and How Auto Accident Settlements Can Exceed Insurance Policy Limits

when and how auto accident settlements can exceed insurance policy limits

A car accident settlement typically doesn’t exceed the insurance policy limit because an insurance company isn’t required to pay out more than the amount of the policy limit. If your automobile accident claim is significantly more than the policy limits, an insurance company will usually settle the claim for the amount of the policy limit. However, there are some instances in which the settlement amount that’s awarded to the accident victim will exceed the policy limit.

Understanding Insurance Policy Limits 

To understand how likely it is that a settlement will exceed an insurance policy’s limits, you must understand how policy limits are defined. An insurance policy limit is the maximum amount an insurer will pay out in the event of a collision. For example, if a policy limit is $60,000, the insurance company will not pay more than $60,000 for damages and injuries sustained in the accident.

Most settlements are made within the policy limit. However, there are some instances in which a settlement can exceed the policy limit. This may occur for a variety of reasons, such as:

  • The extent of liability
  • The severity of the injuries sustained
  • The level of property damage
  • The cost of medical treatment

When the damages incurred exceed the policy limit, an accident victim can be left with unpaid damages.

Collecting Additional Damages 

Personal umbrella policies provide additional liability coverage beyond the limits of an insurance policy. For example, if you have $50,000 in damages and the other motorist only has $30,000 in bodily injury liability coverage, the personal umbrella policy can cover the remaining damages.

Multiple Defendants

If an accident involves a commercial vehicle, such as a company car, delivery van, or semi-truck, an accident victim may be entitled to pursue claims against the company and the driver to recover compensation. Additionally, if multiple motorists are found at fault for a collision, an accident victim may have the option to file a claim against each motorist.

Bad Faith Claim

Bad faith claims are made against insurance companies if it’s believed that an insurance company has acted in bad faith by failing to fulfill its obligations.

When a driver purchases an insurance policy, they enter into a contract with the insurer. The insurance company is obligated to act in good faith, which means that they must act in a timely, fair, and reasonable manner when providing coverage and processing a claim. If the insurance company delays payment, unfairly denies a claim, or fails to investigate a claim, they may be considered to have acted in bad faith. If found to have acted in bad faith, the insurance company may be forced to pay additional damages and penalties that extend beyond the policy’s coverage.

Contact Us Today 

While it’s not common for a settlement to exceed policy limits, it can still occur in catastrophic or severe accidents. If you have been involved in a car crash and you’re unsure of how to pursue compensation, or the insurance company is refusing to offer you a fair settlement, contact a car accident lawyer at Friedland & Associates as soon as possible to schedule a free legal consultation.

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