Sean | January 3, 2023

Insurance Policy Limits: Everything You Need To Know

Insurance companies pay most personal injury claims. Every insurance company has a policy limit, which is the maximum amount they have agreed to pay in case of an accident. In many cases, this policy limit represents the maximum amount of compensation you can obtain. In other cases, however, there are ways around this limitation.

How Policy Limits Work

A policy limit states the maximum amount of coverage available to a successful claimant. In a homeowner’s insurance policy, for example, the maximum payout per individual might be $50,000. Meanwhile, the maximum payout per incident might be $100,000. In such a case, policy limits would work like this:

One injury worth $40,000: Insurance pays everything.
One injury worth $75,000: Insurance pays $50,000 but does not cover the remaining $25,000
Two injuries worth $45,000 and $47,000, respectively: Insurance pays everything.
Two injuries worth $45,000 and $54,000: Insurance pays $45,000 for the first injured party and $50,000 for the second injured party. The second injured party must pay the remaining $4,000.
Three injuries worth $40,000, $45,000, and $38,000. The parties would split $100,000 according to policy terms, but $23,000 would remain uncovered.

Read your policy carefully to determine how much coverage you are eligible for.

Special Case: Florida Car Accidents

Florida car accident law contains at least two idiosyncrasies that might catch some drivers by surprise:

Florida is a “no-fault” auto insurance state for personal injury, but an “at-fault” auto insurance state for property damage. You must rely on your own PIP insurance of up to $10,000 for personal injury, regardless of fault. You cannot sue the at-fault driver unless your injuries are “serious.” You can immediately sue the at-fault driver for property damage. Every driver must carry $10,000 in property damage liability insurance.
Florida is one of only two states that do not require their drivers to purchase bodily injury liability insurance (in effect, the policy limit is zero). This might matter if your injuries are “serious” as defined by Florida law and if your medical expenses greatly exceed $10,000. In this case, you could (and should) file a personal injury claim against the at-fault driver. The problem is that if the driver cannot afford to purchase bodily injury liability insurance, they probably cannot afford to pay your claim.

Many legal scholars believe that Florida auto accident insurance law is in need of reform.

Evading Policy Limits: Collecting Under an Umbrella Policy

The at-fault driver might carry “umbrella insurance”, which covers gaps in other insurance coverage, such as bodily injury liability. The at-fault party’s umbrella insurance doesn’t kick in until their primary insurance assets (bodily injury liability insurance, for example) have been depleted. In this case, it could prove quite useful.

Collecting Against the Defendant’s Personal Assets

If your losses exceed the defendant’s policy limits and you have no other options, you can try coming after the defendant’s personal assets. The problem (as stated previously with reference to car accidents) is that defendants who are not well-insured typically own few assets that you can seize. You might also hesitate to drive your next-door neighbor into bankruptcy over, for example, a dog bite claim.

Collecting Against Additional Defendants

If policy limits prevent you from collecting all of your damages against the defendant you claimed against, you might try filing a claim against one of the following alternative defendants:

Another party who contributed to the accident;
The at-fault party’s employer;
An alcohol vendor who served the defendant prior to a DUI accident;
The manufacturer or distributor of a defective product that contributed to the accident; or
The government, if negligent road maintenance (for example), contributed to the accident.

Talk to your lawyer about whether you can actually hold these defendants liable because certain conditions apply.

Most St. Petersburg Personal Injury Lawyers Won’t Charge You Unless They Win Your Case

Typically, a personal injury lawyer will take about a third of your compensation in exchange for winning your case, either in court or at the negotiating table. If they don’t win-–well, a third of zero is still zero. Nevertheless, an experienced personal injury lawyer might be able to multiply your compensation.

Contact Our Personal Injury Law Firm – Lopez Accident Injury Attorneys

Contact a St. Petersburg personal injury lawyer at Lopez Accident Injury Attorneys and schedule a free case review today.

Lopez Accident Injury Attorneys
700 7th Ave N Suite B
St. Petersburg, FL 33701
(727) 933-0015