What Happens When a Car Accident Exceeds Insurance Limits?

You might face mounting medical bills and income losses if you get hurt in a car accident. You might need to figure out what steps to take next. The good news is that you could be eligible for compensation from various sources, including your insurance policy, other parties’ insurance policies, and sometimes both.

However, the available policy limits might not fully cover your losses. In that case, you might need help from a car accident lawyer to identify all your options and pursue the compensation you deserve.

Continue reading to learn more about how car insurance works, how auto insurance requirements can affect the compensation you seek, and what happens when a car accident exceeds the limits of specific policies.

Fault-Based and No-Fault Insurance System for Car Accidents

Most states follow a fault-based insurance system for car accidents, which means crash victims can hold at-fault parties responsible for their losses, such as medical bills and lost income. When a driver causes an accident in a fault-based state, those who suffer injuries or property damage can seek compensation by filing claims with the at-fault driver’s insurance.

On the other hand, about a dozen states follow a no-fault insurance system for car accidents. In no-fault states, insurance laws require drivers to seek compensation from their auto insurance policies to pay for their crash-related medical bills, no matter who is at fault for an accident. All drivers in no-fault states carry minimum amounts of no-fault insurance coverage, which pays for their losses regardless of responsibility after a wreck.

You may step outside the no-fault insurance system after certain car accidents in no-fault states, but only in limited circumstances. For instance, if you can prove that you suffered a severe injury in a crash, state law might allow you to file a claim against another driver or file a lawsuit to seek compensation.

No-Fault Auto Insurance Requirements

Drivers in most no-fault states must carry specific minimum amounts of personal injury protection (PIP) insurance coverage and property damage liability insurance. PIP insurance pays for your necessary medical expenses after a car accident, no matter who is at fault. PDL insurance pays for the other driver’s property damage if you or someone else driving your vehicle causes a crash.

Some no-fault states allow specific individuals and organizations to qualify as self-insurers by obtaining self-insurance certificates. Those who want self-insurance certificates must usually have specific minimum amounts of available net worth on hand or maintain sufficient annual net worth to qualify.

Personal Injury Protection (PIP) Insurance

PIP insurance reduces the likelihood of crash victims having to sue someone else for their losses. PIP insurance pays for limited injury-related costs you incur from a car accident, no matter who causes the wreck.

When a car accident occurs in a no-fault state, the PIP policy covers an injured policyholder, their passengers, and any relatives with permission to drive the car. Your PIP insurance also covers you even if you did not drive when an accident occurs, such as if you get hurt in a pedestrian accident. When a car accident happens in another state or Canada, your PIP insurance only covers you and your household relatives while driving your vehicle.

Property Damage Liability (PDL) Insurance

PDL insurance coverage differs from PIP coverage because it doesn’t pay for your losses after an accident. PDL insurance pays for other people’s property damage costs if you are at fault for an accident. This includes crash damage to vehicles as well as damage to fixed objects like fences or mailboxes. Your PDL insurance protects you even if you are driving someone else’s car, and some PDL policies even cover anyone else who drives your vehicle with your permission.

PDL coverage is vital in fault-based and no-fault states because most no-fault laws do not apply to property damage claims. While you must turn to your own auto insurance company first to get coverage for medical expenses in a no-fault state, the same is not true for property damage costs.

If another driver damages your vehicle or other property in an accident, you can file a liability claim against them without going through your provider first. Conversely, your PDL coverage protects you from paying out of pocket if you damage someone else’s car in an accident.

Other Auto Insurance Coverage

Several other types of auto insurance could apply to your case after a car accident, such as:

• Bodily injury liability (BIL) insurance. BIL insurance is optional in most no-fault states, but many fault-based states require it. This insurance pays for other people’s injury-related costs when you or someone else driving your car is at fault for a car accident. BIL insurance will also cover legal fees if someone else sues you for their injuries.

• Collision insurance. Collision insurance covers accident-related repair or replacement costs for your car, no matter who is at fault for an accident. It does not pay for damage to anyone else’s property.

• Comprehensive insurance. Comprehensive or “other-than-collision” insurance covers property damage costs from anything other than a car accident, such as a falling tree branch or a collision with an animal.

• Uninsured motorist (UM) or underinsured motorist (UIM) insurance. Uninsured motorist (UM) insurance pays for your losses after an accident with a driver who has no insurance. In contrast, underinsured motorist (UIM) insurance pays for your losses after a crash with a driver with insufficient liability insurance. UM insurance also kicks in if you are in a hit-and-run accident. This type of coverage pays for your medical bills and lost earnings beyond the limits of PIP policies.

• Medical payments (MedPay) insurance. MedPay insurance is similar to PIP in that it covers your and your passengers’ medical bills after an accident, no matter who is at fault. However, MedPay only covers medical and funeral expenses, not earning losses or incidental costs. If you purchase MedPay insurance, your policy can cover deductibles and copays from other insurance policies. MedPay is especially useful in cases involving medical expenses that exceed PIP limits.

Other Types of Insurance Policies That Could Apply

In certain situations, one or more non-auto insurance policies could apply to your car accident case.

For instance, you could get coverage from:

• Health insurance. If your medical expenses exceed the costs of all auto insurance policies that apply to your situation, your health insurance coverage could cover all or part of the remaining balance.

• Workers’ compensation insurance. Your employer’s workers’ compensation insurance policy should cover some of your medical bills and income losses after a car accident in a company car or while traveling for work-related purposes.

• Homeowner’s insurance. If someone else gets hurt in a car accident on your property, your homeowner’s insurance policy could cover their losses.

• Disability or life insurance. If you carry a disability insurance policy, you could get income replacement benefits after an accident that compromises your ability to work. Similarly, if you have life insurance, your loved ones could recover compensation for your final expenses if you die in an accident.

What Happens if Your Claim Exceeds Insurance Limits

In states with relatively low auto insurance requirements, many accident victims incur medical expenses and other losses that quickly surpass the available policy limits. When your car accident claim exceeds the limits of the available insurance policies, your options may look different depending on the circumstances.

If you exceed the limits of your auto insurance policy, such as a PIP policy, you can always file claims with your other insurance providers, such as your health or disability insurance provider. In many no-fault states, you can only file a car accident claim against another party if your injuries are severe or your losses meet certain thresholds.

If you have grounds for an insurance claim against an at-fault driver, you could still exceed the limits of their insurance policy and yours combined. In that case, your only remaining option might be filing a lawsuit with the help of a lawyer. If your attorney can prove the other driver is responsible in court, the other driver would be liable for your financial losses.

Even if you win a car accident lawsuit against another driver, getting full compensation isn’t always easy or even possible. For instance, if the other driver lacks the money or assets to pay for your losses, they might be unable to pay despite a court order. And if the other driver was in a stolen vehicle, it could be harder to hold them accountable.

Working with a knowledgeable attorney is the best way to maximize your compensation and minimize your out-of-pocket losses after a car accident. The right car accident lawyer can identify all potential sources of insurance coverage, determine whether you have a claim against another party, and negotiate aggressively to maximize your settlement. A good attorney can also take your case to court and hold the other party accountable at trial when reasonable and necessary.

How Much You Could Get for a Car Accident Claim

If you file a car accident claim or personal injury lawsuit against another driver, you could get more money for your losses than your insurance policies provide.

For instance, you could claim compensation for the following personal and financial losses after an accident:

• Hospital bills and other medical costs from the accident

• Future medical expenses you will likely incur due to the accident

• Incidental costs, such as travel expenses for doctor’s appointments

• Lost earnings from any time you miss at work while you recover

• Losses in your future earning capacity due to permanent injuries

• Subjective losses, such as pain, suffering, and lost quality of life

• Repair or replacement costs for damage to your personal property

How Long Do You Have to File a Car Accident Claim

Every state has a statute of limitations that imposes strict time limits on a person’s ability to take certain types of legal action, such as filing a car accident lawsuit. The deadline differs in each state, but most time limits range from one to six years after the accident. In most cases, the clock starts ticking immediately, though there are certain exceptions, such as cases involving injuries to minor children.

One or several years might sound like plenty of time to file a car accident claim, but that time can go by faster than you would think. When you factor in how long it can take to recover from your crash injuries, find the right lawyer to represent you, and have your lawyer build the most robust case, a few years can go by in a flash.

That’s why you should contact a knowledgeable lawyer as soon as possible after any car accident. If you file your lawsuit after the statutory deadline, the court will likely dismiss your case, and you could lose your right to seek compensation in civil court.

Why You Need Help from a Car Accident Injury Lawyer

Car Accident Attorney, In addition to preparing your case on time, a car accident lawyer can help you after a car accident by:

• Evaluating your situation to determine whether you have an injury claim

• Explaining your rights and reviewing your options for seeking compensation

• Identifying all possible sources of financial relief for your injuries and other losses

• Conducting an independent investigation into the car accident

• Uncovering and preserving valuable evidence and documentation

• Interviewing reliable eyewitnesses to obtain statements that support your case

• Working with expert witnesses, such as accident reconstruction specialists

• Communicating with the other party and their insurance company on your behalf

• Issuing spoliation letters to prevent other parties from destroying evidence

• Negotiating aggressively to maximize the value of any insurance settlements

• Taking your case to court and representing you at trial when appropriate

If another driver injured you in a car accident, and you have questions about your insurance limits, contact a knowledgeable personal injury attorney near you.