Collecting Injury Compensation Beyond Insurance Policy Limits

It's not easy, but you can sometimes collect personal injury damages beyond the limits of the at-fault party's insurance coverage.

Updated by , J.D. · University of San Francisco School of Law

An insurance policy is a contract between the insurance company and the person, business, or entity being insured. The insurance company agrees to assume financial responsibility for injuries and other losses caused by the insured in exchange for premiums. But each insurance policy—from auto insurance to medical malpractice insurance—has its own limits.

How Insurance Policy Limits Work

All liability insurance policies have limits. A limit is the maximum dollar amount the insurance company is responsible for in terms of losses arising from an incident that triggers coverage. For example, if you buy a liability car insurance policy that has a $50,000 limit, the insurance company is going to pay out only $50,000 to anyone who suffers injuries and vehicle damage in an accident you cause. If there are $100,000 in damages, the insurance company isn't going to pay the excess $50,000. This money, if awarded by a judge or jury, will have to come from somewhere else.

Can You Collect Excess Damages?

There are a number of ways that an injured person may collect compensation in excess of insurance policy limits. These methods include:

  • trying to collect from a defendant personally
  • recovering under an umbrella insurance policy, and
  • bringing a personal injury lawsuit against more than one defendant.

Let's take a closer look at these three options.

Collecting From the Defendant Personally

In many cases, if your damages exceed the at-fault party's insurance policy limits, your only recourse will be to collect directly from the defendant. This can be hard to do if the defendant doesn't have cash or assets to pay you.

You may be able to go to court and get a judge to order wage garnishment or to place a lien on the defendant's properties, but this depends on the defendant having wages and having property to place a lien on. If a defendant really has no money or assets, then a judgment in excess of the policy limits is going to be virtually uncollectible.

Umbrella Policies

Some people or businesses have more than one insurance policy. For example, many corporate entities and large businesses, have an umbrella policy that essentially "goes over" all of the other insurance coverage they have. This kind of policy is designed to kick in when the policyholder faces liability in excess of a particular policy limit.

Let's say that a company had $100,000 in liability protection and a $50,000 umbrella policy. The first policy would pay up to $100,000. The second would kick in and pay $50,000 more if the damages exceeded the amount of coverage available under the first policy.

While umbrella policies are especially common among corporate or business defendants, some private individuals may have them too. So it's best to do your homework and get a clear understanding of all the insurance policies that may be in play for the defendant in your case.

Suing Additional Defendants

Sometimes, more than one party can be held legally and financially responsible for an accident. In that case, the different defendants are "jointly and severally" liable for the whole amount of damages. If, for example, two defendants were responsible for a $100,000 damage award, you could collect up to the $50,000 policy limit from each defendant.

Of course, there aren't always multiple defendants or multiple responsible parties. But some examples of situations where there might be multiple defendants include:

  • Medical malpractice. You might be able to sue both a hospital and a doctor for medical negligence.
  • Product liability. You can often sue the manufacturer and the distributor of a defective product.
  • Vicarious liability. You may be able to sue an employer and an employee when the employee's negligence causes you harm (called "respondeat superior").

When the Insurance Company Acts in Bad Faith

Insurance companies may be on the hook for damage awards beyond policy limits if they have an opportunity to settle a claim within policy limits and fail to do so in bad faith. For example, if it's very clear that an injured person is entitled to recover under the terms of the policy and is willing to settle within limits, but the insurance company refuses, then the insurer might be acting in bad faith. But this kind of situation is rare. Usually, if an insurance company denies a claim or denies coverage altogether, it has a sound reason for doing so.

Talk to a Lawyer

If you've been injured and your damages exceed insurance policy limits, talk to a lawyer. A personal injury lawyer can help you calculate your personal injury settlement value, negotiate a personal injury settlement, and look for potential alternative sources of compensation.

Learn more about hiring a personal injury lawyer. When you're ready, you can connect with a lawyer directly from this page for free.

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