What Happens When a Car Accident Exceeds Insurance Limits?

It’s a shocking reality: a significant amount of car accident victims in the U.S. find themselves dealing with financial hardship because the at-fault driver’s insurance coverage falls short of the total damages. The medical bills, vehicle repairs, and lost wages quickly add up, and suddenly, insurance limits seem painfully inadequate.

If you’ve ever been in this situation—or worry about what happens if it occurs—you’re not alone. When a car accident exceeds insurance limits, it can leave victims facing a frustrating financial gap. But there are ways to recover what you deserve with the help of a car accident lawyer, and this guide will walk you through your legal options and how to protect yourself.

To ensure you receive full compensation for your injuries, reach out to Boohoff Law today at (877) 999-9999 for a free consultation, and let us help you secure the compensation you deserve.

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Understanding Insurance Policy Limits

When you purchase car insurance, it comes with specific coverage limits—essentially, the maximum amounr your insurer is obligated to pay in the event of an accident. However, many drivers don’t realize how easily their damages can surpass these limits.

While every state has slightly different laws around insurance, in general, auto insurance policies are designed with two primary types of liability coverage:

1. Bodily Injury Liability: This covers the medical expenses, lost wages, and other related costs when someone suffers injuries due to another’s negligence. For example, in Florida, the state minimum is often as low as $10,000 per person and $20,000 per accident for bodily injury liability​. Washington has a similar baseline, with $25,000 per person and $50,000 per accident​.
2. Property Damage Liability: This covers repairs to another person’s vehicle or property that someone damages in an accident. In states like Florida, the minimum requirement for property damage is $10,000. In Washington, it’s $10,000 as well, but higher limits are available to protect against larger claims.

Remember, these coverage limits define the boundaries of what your insurance company will pay. Anything beyond those limits becomes your responsibility, which can lead to significant financial exposure if the accident is severe.

Real-World Example

Imagine a scenario where you’re at fault in a multi-car collision, and the total medical expenses for the injured parties amount to $150,000. If your insurance policy only covers up to $50,000 in bodily injury per accident, you’re left with $100,000 in unpaid damages.

Given the disparities in state requirements, having only the minimum coverage is risky. Many drivers assume that insurance will cover everything, but that’s not always the case, especially when dealing with high medical bills or multiple damaged vehicles. This shortfall is precisely what we’ll explore in the next sections.

The Insurance Company Pays Up to Policy Limits

Once a legal authority establishes the liable party, the at-fault driver’s insurance company is legally obligated to pay for damages—but only up to the policy’s maximum limits. For example, if the at-fault driver’s bodily injury liability limit is $50,000, but your medical bills total $80,000, the insurer will pay the $50,000 and no more. The remaining $30,000 becomes your responsibility to pursue.

This gap in compensation often comes as a shock, especially in severe accidents with high medical expenses or extensive property damage​.

Options for Recovering the Remaining Damages

When insurance coverage falls short, you still have several ways to recover the additional compensation you’re owed:

1. Filing a Claim Under Your Own Insurance
   If you have additional coverage, such as Underinsured Motorist (UIM) or Uninsured Motorist (UM) coverage, you may be able to recover the difference through your own insurance policy. For example, if your damages total $100,000 and the at-fault driver’s insurance only covers $25,000, your UIM coverage could cover the remaining $75,000 up to your own policy limits. This option applies in states like Florida, where many drivers carry minimal insurance​.
   • Underinsured Motorist (UIM) Coverage: Helps cover damages when the at-fault driver’s insurance is insufficient.
   • Uninsured Motorist (UM) Coverage: Comes into play if the at-fault driver has no insurance at all.
2. Suing the At-Fault Driver
   If the at-fault driver’s insurance coverage doesn’t meet your damages, you may consider suing them personally. If you win the lawsuit, the court could order the at-fault party to pay the remaining damages out of their own assets. This can involve:
   • Wage Garnishment: The court may withhold a portion of the at-fault driver’s wages until they pay their debts.
   • Asset Seizure: If the at-fault driver has substantial assets like property, the court may liquidate them to satisfy the judgment​.

However, collecting from the at-fault driver isn’t always simple, especially if they lack significant assets or income.

1. Medical Payments (MedPay) Coverage
   In some states, including Florida and Washington, drivers can purchase Medical Payments (MedPay) coverage, which covers medical expenses regardless of who was at fault in the accident. MedPay can help cover your remaining medical bills if the at-fault driver’s insurance is insufficient​.
2. Umbrella Insurance Policies
   Umbrella insurance is an optional policy that provides additional coverage beyond your standard auto insurance. If the at-fault driver has umbrella coverage, it can extend their liability protection and potentially cover your excess damages​ (more on this below).

State-Specific Laws on Exceeding Insurance Limits

While each state has its own minimum insurance requirements, these are often inadequate in serious accidents. We don’t have space in this article to go over every state, so let’s take a closer look at how Florida and Washington address these situations.

Florida: A No-Fault State with Unique Insurance Rules

Florida operates under a no-fault insurance system, which means that your own insurance covers your initial medical expenses and lost wages after an accident, regardless of who caused the crash. This is done through Personal Injury Protection (PIP) coverage, which is mandatory for all Florida drivers. PIP typically covers up to $10,000 in medical expenses and lost wages​.

However, Florida does not require drivers to carry bodily injury liability insurance, which can be problematic when accidents involve serious injuries. If the at-fault driver has no bodily injury coverage, and your damages exceed your PIP limit, you may need to pursue compensation through Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage if you have these optional policies.

Additionally, Florida law allows accident victims to pursue legal action against the at-fault driver once their medical expenses exceed the PIP limits. In these cases, filing a personal injury lawsuit becomes an important tool for recovering compensation not covered by insurance​.

Washington: Mandatory Liability Coverage with Higher Minimums

Unlike Florida, Washington requires all drivers to carry bodily injury liability insurance, with minimum limits of $25,000 per person and $50,000 per accident. This coverage is intended to compensate victims for their medical expenses, lost wages, and pain and suffering if they suffer injuries from an accident caused by the insured driver.

However, as with many states, these minimums often fall short in serious accidents. Washington drivers can protect themselves by purchasing Underinsured Motorist (UIM) coverage, which steps in when the at-fault driver’s insurance isn’t enough to cover the full extent of damages.

Washington also allows victims to sue the at-fault driver personally if damages exceed the policy limits. Courts may order wage garnishment or asset seizure to satisfy a judgment, depending on the driver’s financial situation​.

How a Personal Injury Attorney Can Help

When your damages exceed insurance limits, navigating the legal and financial landscape on your own can be overwhelming. A skilled personal injury attorney provides valuable assistance by exploring all available avenues for compensation, helping you avoid pitfalls, and ensuring that you recover what you’re entitled to under the law.

Maximizing Compensation through Negotiation

Insurance companies are often quick to offer settlements that fall short of what victims deserve, especially when they realize the damages could exceed policy limits. One of the key roles of a personal injury attorney is to negotiate on your behalf to maximize the payout within the available limits. Attorneys are experienced in dealing with the tactics insurers may use to minimize claims, such as lowball settlement offers or attempts to shift partial blame onto the victim.

By having an attorney involved, you increase your chances of securing a fair settlement. This is particularly importan when the insurer knows you could file a lawsuit. While individuals without legal representation often feel pressured into accepting inadequate offers, an attorney can help you negotiate a more favorable settlement that fully addresses your needs.

Exploring Additional Coverage Options

Attorneys understand the various insurance policies that might come into play after an accident. Beyond the at-fault driver’s liability limits, they can assess whether you have access to Uninsured or Underinsured Motorist (UIM/UM) coverage, or other forms of compensation like Medical Payments (MedPay) coverage​. These additional coverages can help make up the shortfall when the other driver’s policy is insufficient.

For instance, if you have UIM coverage, your attorney can file a claim with your own insurer to recover the remaining damages. Attorneys also ensure that claims are filed in a timely manner and in accordance with the complex rules governing different types of coverage.

Pursuing Legal Action Against the At-Fault Driver

If insurance coverage still falls short, your attorney can guide you through the process of suing the at-fault driver personally. This may involve going to court to secure a judgment for the remaining damages. The attorney can help you evaluate the at-fault driver’s financial situation to determine whether suing them is a viable option. If the driver has significant assets, you may be able to recover compensation through wage garnishment, property liens, or asset seizure.

Strategic Use of Umbrella Policies

An umbrella insurance policy is a type of liability coverage that provides additional financial protection beyond the limits of your standard home, auto, or other primary insurance policies. It’s called an “umbrella” because, like a physical umbrella that shields you from rain, this policy extends over and “covers” the gaps left by your underlying policies. It’s designed to protect the assets of the policy owner from large claims or lawsuits that exceed the liability limits of your primary insurance​.

In cases where the at-fault driver has this policy, your attorney can investigate whether this extra layer of protection applies. If it does, this could be another avenue to get compensation.

Protect Your Future with Boohoff Law

When the insurance checks stop coming and medical bills keep piling up, time is not on your side. Without the right legal guidance from a personal injury lawyer, you could lose out on the compensation you deserve. Serious accidents require serious action, and failing to take the right steps today can lead to devastating consequences tomorrow.

Don’t let the insurance companies dictate your future. At Boohoff Law, we know how to fight for your rights and ensure that you recover every dollar you’re owed. Whether it’s negotiating with insurers or pursuing a lawsuit against the at-fault party, we’re here to make sure you don’t get left holding the bill.

Contact Boohoff Law today (877) 999-9999 for a free consultation, and let us fight for your compensation, your health, and your peace of mind.

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