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What Happens When Auto Accident Settlements Exceed Policy Limits?


When you are negotiating an auto accident settlement, the most important numbers are the insurance policy limits. What happens when auto accident settlements exceed the policy limits? Do accident victims have any options to recover more than the policy limits in those cases? Today we are going to discuss the answers to those questions.

Minimum Insurance Requirements in Washington and Oregon

Each state has different requirements for minimum auto insurance that a driver must carry.

Oregon auto insurance minimums are:

  • $25,000 for bodily injury per person;
  • $50,000 for bodily injury to others per accident;
  • $20,000 for property damage;
  • Personal injury protection (PIP) of $15,000 per person; and
  • Uninsured motorist (UIM) insurance of $25,000 per person and $50,000 per crash for bodily injury.

Unlike Oregon, Washington does not require a minimum amount of PIP and UIM insurance. Washington limits are as follows:

  • $25,000 for injury or death to one person;
  • $50,000 for injuries or death to more than one person; and
  • $10,000 for property damage.

Liability insurance compensates someone else for injuries or property damage that the policyholder caused. Many policyholders also opt to have uninsured/underinsured motorist (UI/UIM) coverage, which covers the policyholder if they are in an accident with someone who does not have any liability insurance or who does not carry sufficient insurance. PIP insurance provides coverage for the policyholder for certain expenses such as medical bills and funeral expenses in case of an accident.

Auto Accident Settlements

Most auto accident claims will settle out of court. Litigation can be very time-consuming and expensive, and in most cases, the policy minimums will cover the claimant’s expenses. Insurance companies must make a good faith effort to negotiate a fair settlement with the accident victim. But if you do not use a personal injury attorney to negotiate on your behalf, it is possible that you will not even get up to the policy limit. Obviously, insurance companies do not want to pay more than they are obligated to, so they will try to keep the settlement offer as low as possible. And what happens if your expenses exceed the policy limits? It can be difficult to obtain more than the insurance policy limits, but it is possible through a settlement agreement. Generally, a settlement agreement will contain a clause that the injured party will not pursue other legal claims, in return for the settlement money.

Additional Coverage

You may have other options that you should discuss with your lawyer if your expenses exceed the defendant’s policy limits.

Umbrella Policy

Umbrella insurance is coverage that people maintain to cover possible expenses that exceed their policy limits. Individual umbrella insurance policies usually supplement someone’s home or auto insurance policies. These types of policies are more commonly held by corporations or companies to cover liabilities to their businesses.

Uninsured/Underinsured Motorist Policy

As mentioned above, UI/UIM insurance policies cover the people who own the policy in the event that they get into a car accident with someone whose policy limits do not cover their expenses. In these instances, your insurance company will cover you, depending on your own policy limits, for certain damages that are not covered by the at-fault party’s insurance in a settlement. You would have to make the claim with your own insurance company and settle that negotiation with them.

Personal Claim Against the Defendant

If you did not agree in your settlement not to pursue litigation against the defendant, you can start a personal claim in court against the at-fault party if their insurance policy does not cover your expenses. This is definitely an option you must discuss with an experienced attorney first. You may be wasting your time and money on litigation if the defendant does not even have the means to pay for your claims. Your attorney will be able to give you the best advice about your chances of success in this instance.

Claims Against Other Defendants

When you discuss your claim with your auto accident lawyer, they will figure out all the possible defendants in the case. There may be multiple entities involved whose insurance policies will payout on the claim. For example, if you get into an accident with a commercial vehicle, both the driver and the company may be liable.

Bad Faith Claim Against the Insurance Company

Insurance companies must negotiate fairly with claimants. If they know that the claim should be approved, but they still refuse to offer a reasonable settlement, whether it is your insurance policy or the defendant’s, you may have a bad faith claim. In jury trials that include bad faith claims, the jury may award damages greater than the policy limits, and the insurance company could be required to pay the entire judgment amount regardless of the policy.

Contact D’Amore Law Group to Discuss Your Options

Your attorney is one of your biggest assets in making a successful claim. While it is important to hire a lawyer as soon as possible after your injury, it may be even more important to hire the right one. If you hire an attorney that does not have the right experience or if you try to negotiate with the insurance company yourself, you are taking the risk of making critical mistakes. You or an inexperienced attorney may unknowingly say something that hurts your case, minimize your injuries, or sign away your rights. The attorneys of D’Amore Law Group have decades of experience representing accident victims and their families. It is crucial that you have the right attorney on your side to protect your chances of a full recovery. We will guide you through the legal process, provide you with an honest assessment of your legal rights and options, and help you make informed decisions about the best course of action for you specifically. Please contact us today to discuss your claim.

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