Can a car accident settlement exceed insurance policy limits?
The short answer is “yes,” but Georgia's legal minimum vehicle and liability collision coverage policy limit is $25K whereas the average value of a car accident claim is around $50K. So, all drivers need to carry UM coverage and Georgia lawmakers need to increase the legal minimum for all bodily injury liability auto insurance coverage.
As Georgia's leading auto accident law firm, we often get questions about whether or not an auto accident settlement can exceed the insurance policy limits of the at-fault driver's car insurance.
Sure, it can certainly happen, but the truth is that an auto accident settlement is rarely higher than the insurance company pays policy limits. This is harmful both to car accident victims and the person who caused the crash as well car insurance itself.
I can not tell you how many times I discuss this issue with the accident victims that I represent. There is no doubt that this is one of the most serious challenges that a Georgia personal injury lawyer ever has to work with.
Granted, in my practice, I have had cases where I am able to recover money over the wrongful driver's insurance policy limits. Recently, we won a settlement for $600,000 over the policy limit in a case for bodily injury liability one of our clients.
But, there is no simple answer as to how often an auto accident lawyer is able to recover compensation above the insurance policy limit.
Georgia drivers need to protect themselves
Although exceeding policy limits can happen, all drivers in Georgia need to take more action in order to protect themselves. Additionally, Georgia lawmakers need to pass laws to increase the minimum amount of insurance coverage required.
This is because, the reality is that there can be some pretty steep consequences if you only carry the legal Georgia minimum insurance of $25,000.
Consequences of having minimum insurance coverage
Georgia auto accident data shows us that the average liability claim amount from a car accident in Georgia is much higher than the minimum liability coverage policy limits required under Georgia law. This means that the damages caused by accidents in Georgia are, on average, much higher than the available insurance to cover those damages. This leaves injured victims with more medical bills and less compensation than they deserve, and at-fault drivers with steep out of pocket payments to cover the serious property damage coverage they caused.
In other words, if a driver chooses to purchase auto liability insurance at the required minimum policy limit, then the other driver, will most likely be underinsured in the event of a crash. So, that uninsured driver will not have enough insurance to cover the damages–and this will mean that their personal assets are available and exposed to be used to pay for the injuries they caused.
Applying this to Georgia drivers. In Georgia, all drivers are legally required to carry car insurance with the following policy limits:
- $25,000 if one person is injured or killed in the crash
- $50,000 if two or more people are injured or killed in the crash
However, those minimum liability umbrella policy limits are not even close to the average car accident claim which is around a total of $50,000 in Georgia. This means that if a driver has only the minimum liability policy limits of $25,000, and they cause a crash that results in the average amount of damages of $50,000, then they are stuck with being responsible for the remaining $25,000 out of their personal assets.
How to collect injury compensation above the insurance policy limits
As stated above, collecting compensation above the limits of the at-fault driver's minimum car insurance amount policy is not easy, but it is possible. In order to get injury compensation above the at-fault driver's minimum car insurance amount policy limits, including additional coverage for pain and suffering damages, an injury victim has a couple options.
The first option is for uninsured motorist insurance coverage. If the accident victim has uninsured or underinsured motorist coverage, then the attorney can make a claim through the injury vicitm's own insurance policy in order to get additional compensation that exceeds the at-fault party insurance provider's minimum policy coverage.
This is highly encouraged and everyone driving record and should carry at least $250,000 in uninsured personal injury, or underinsured motorist coverage.
However, if the car accident victim does not have uninsured or underinsured motorist insurance, then the second option is to try to recover from the personal assets of the vehicle damage insurance provider the person who caused the vehicle registration crash.
This financial responsibility is very difficult because, unfortunately, if the at-fault driver's personal assets are not enough to cover all medical costs and the losses–or if they declare bankruptcy–the car accident injury victim will not be able to collect any additional compensation.
Will insurance pay more than policy limits?
Generally, the answer to this question is almost always “no.”
When we purchase auto insurance, we sign a contract with the insurance company. This means that the auto insurance the company, under the contract, is not required to pay a single dollar above the insurance policy limits chosen by the insured. If the chosen insurance policy limits work and are just the required minimum coverage, then that is all they will likely pay.
There is a small exception where we can sometimes recover “bad faith” damages against the liability insurance company. This occurs when the insurance company, in some way, fails to protect its own insured and exposes them to an auto accident verdict in excess of the policy limit that they purchased.
I personally litigated a case recently where the liability insurance company did not pay up when it had the chance to settle the case, and we recovered nearly four times the policy limit at trial which the liability insurance policy company had to pay.
It is important to know that this is very rare and an extremely complicated process. In order to succeed with this strategy, you need an experienced auto accident attorney who has actually litigated bad faith lawsuits against insurance companies and knows all of the specific laws that apply. Your attorney will need to set up a potential claim for bad faith during the course of the car accident lawsuit.
This takes some pretty unique strategy, so you will want to find the best car accident attorney you can in order to give you the best chance of success.
How do you get full pain and suffering compensation even if your claim exceeds the at-fault driver's policy limits?
If you have ever heard the term “uninsured motorist coverage” or “underinsured motorist coverage” (UM or UIM) then this is where it comes into the picture.
You want to carry a very very high risk policy limit on your own car insurance requirements both UM and UIM coverage. UM coverage protects drivers by offering what can sometimes be the only means of recovery if the at-fault driver has very low (or minimum) liability policy limits. We recommend that all drivers carry substantial UM coverage, which is actually very affordable, with at least the following policy limits:
- $100,000 per person
- $300,000 per accident
These are our minimum effective recommendations, and if you have more coverage you want, you can also carry more which will be that much more beneficial in the event that you are injured in a car accident.
Without this UM coverage, a car accident victim's only avenue of recovery for property damage will be to go after the personal assets of the driver injured person who caused the crash. As discussed above, this is not a reliable option for recovery of property damage.
How can you protect your assets against a claim that exceeds your policy limits?
There is a very easy answer to this question: you need to carry liability insurance coverage with policy limits that are much higher than the required and minimum limits in Georgia ($25,000/$50,000).
Our team of Georgia auto and vehicle accident experts recommends that all drivers carry no less than the above minimum requirements the following liability coverage:
- $250,000 per person
- $500,000 per accident
This will protect your personal assets so that you and your family are secure and protected. The increase in the amount of your car premium is very small when compared to the protection that you will have from the much higher policy limits.
Conclusion
It is crucial to understand that while insurance policies provide a financial safety net in case of unexpected incidents, they do have their limitations. Policy limits set multiple insurance policies as a maximum on the amount an insurance company is obligated to pay towards a claim. However, in unique and rare circumstances, settlements can indeed exceed these policy limits. This usually happens when the defendant's negligence is particularly egregious or when the damages significantly surpass the policy limit.
While it might sound appealing to pursue a settlement beyond the policy limits, it's important to consider the practicality and feasibility of such actions. Collecting amounts beyond policy limits can be complex and time-consuming, often requiring additional lawsuits, and there's no guarantee of success, especially if the defendant lacks the personal assets to cover the excess amount.
Moreover, the advent of underinsured or uninsured motorist coverage options and umbrella policies can also play an essential role in providing additional protection when policy limits are exhausted. Thus, it is always advisable to seek professional legal and insurance advice to navigate these complexities.
In the end, understanding the intricate relationship between settlements and insurance policy limits will not only facilitate better financial planning but also ensure that more than one person or family member is adequately protected in unforeseen circumstances.
