How Often Do Auto Accident Settlements Exceed the Policy Limits?

How Often Do Auto Accident Settlements Exceed the Policy Limits?

The incidence of auto accident settlements exceeding policy limits is low compared to those that ultimately settle within policy limits. Insurance companies and car accident attorneys work to negotiate a settlement, which the insurance company is then contractually bound to pay. 

In Nevada, motorists are required to carry:

• $25,000 in liability coverage for bodily injury to one person
• $50,000 in bodily injury coverage for two people in one accident
• $20,000 in property damage or destruction coverage

It is typically understood by the parties to a settlement negotiation that the policy limits act as a ceiling for the negotiations. However, the settlement sometimes surpasses the limits of the policy, and that’s where the insurance company’s obligation to pay stops.

Why Auto Accident Settlements Exceed Policy Limits

The types of auto accident claims that typically lead to settlements above policy limits involve serious injuries. Serious injuries lead to:

• Higher medical treatment and hospital bills
• More time out of work that leads to higher lost wages
• The need for expensive medical equipment, such as wheelchairs
• The need to hire help around the house
• More pain and suffering and other intangible damages

When the damages are higher than the coverage, unpaid damages will remain after the insurance company makes its required payout.  

Who Pays the Damages That Exceed the Policy Limits?

When the parties reach a settlement that exceeds the policy limits, the insurance company typically pays out its obligation, and the remaining damages are left for the negligent driver to pay. In these situations, you have a few options for collecting the remaining unpaid compensation. 

Settle With the Driver

Depending on the circumstances, settling with the liable driver for the unpaid compensation may be an option. Generally, this route would not likely bear fruit in cases where the at-fault driver is of low resources. It may also be challenging in cases where significant damages remain after the insurance payout. 

Sue the Driver

If the at-fault driver is unwilling or unable to settle, you can file a lawsuit directly against them for the remaining balance of damages. This course of action may lead to a judgment that ultimately allows the plaintiff to pursue the assets and finances of the defendant, such as the defendant’s:

• Bank accounts
• Wages
• Non-exempt property

Keep in mind that it may not be worth the time and effort to pursue a defendant without enough means to satisfy the damages and cover the costs of the lawsuit. Your car accident lawyer will be capable of properly evaluating the circumstances. 

Driver’s Umbrella Policy

Umbrella policies are liability policies that provide umbrella liability coverage for the policyholders. Generally, these policies do not replace auto insurance. However, they come into play once all forms of auto insurance have been exhausted.  

Other Defendants

Depending on who caused the crash, you may have a cause of action against more than the driver. If the liable driver was on the clock at the time of the crash, their employer may also potentially be liable for damages stemming from the accident.  

Uninsured/Underinsured Insurance Policy

Nevada law does not require drivers to carry underinsured/uninsured motorist coverage. However, if you can afford this coverage, purchasing it is a good idea. Underinsured/uninsured motorist coverage will kick in to cover the remaining damages up to the policy’s limits.  

Bad Faith Insurance

A bad faith insurance claim may be an option for covering outstanding damages when an insurance company negotiates and settles its end of the claim in bad faith. Examples of bad faith insurance behaviors include:

• Delaying payment
• Paying less than the settled amount
• Avoiding communication after agreeing to a settlement

In successful bad-faith claims, insurance companies are forced to pay damages on top of the policy payouts they are responsible for. 

What Is the Maximum the Insurance Company Will Pay Per Car Accident?

The maximum compensation an insurance company will pay depends on the circumstances. Attorneys and insurance companies negotiate settlement pay based on many factors, such as:

• The policy limits
• The strength of the evidence of liability
• The seriousness of the injuries
• The degree of comparative fault of the injury victim
• The skill of the car accident attorney involved

In order to continue making profits, insurance companies rarely agree to pay full damages upfront. They use any excuse or factor to devalue accident claims, such as evidence problems or shared fault of the victim. For example, with $15,000 in damages, you might only receive $7,000 in a settlement because of shared liability. 

Throughout the car accident claim timeline, car accident lawyers fight hard to hold insurance companies accountable until a settlement is reached or a trial date is set. Without a lawyer fighting for you, most insurance companies’ payouts are far below reasonable. 

Timing Considerations 

Nevada has a two-year statute of limitations for car accident cases. Whether your damages exceed the policy’s limits or not, you should take immediate action to seek compensation within this two-year window. The clock starts ticking on the date of the accident. 

Protect the Compensation You Deserve

Regardless of whether your settlement exceeds or is within policy limits, you are entitled to receive every dollar you deserve. Insurance companies will not pay you fair compensation on your own. But a car accident lawyer will fight for what is yours.

Sources:

Insurance.

NRS 11.190.NRS 21.090.