What Happens When Car Accident Settlements Exceed Insurance Policy Limits? – Automobile Accidents Legal Blogs Posted by Michael John Tario


The vast majority of car accident settlements are paid by the at-fault insurance company. One thing that people may not think about is that insurance policies and policy limits vary from insured person to insured person, which means that not every policy will have a high enough limit to cover a full and fair settlement. A policy limit or an insurance limit is the highest amount an insurer will pay for a claim that their customer’s insurance policy covers.

Those who are severely injured in an accident by a person with a low policy limit may run into trouble negotiating a settlement that covers their losses and injuries. While it can be a challenge to collect injury compensation beyond an insurance policy limit, no situation is hopeless. We recommend contacting an experienced car accident lawyer who can assess all your legal options.

What to know about insurance policy limits


Every state requires that car insurance policies have liability coverage, which pays for bodily injuries and property damage that the insured inflicts on others in an at-fault accident. The minimum liability insurance Washington State is $25,000 for injuries or death to one person in an accident you cause;
$50,000 for total injuries or death to all people in an accident you cause; and
$10,000 for damage to anyone else’s property in an accident you cause. Washington State’s minimum liability insurance is sometimes written as 25/50 10.

If a Washington driver purchases the bare minimum insurance and causes a car accident, their insurance policy will limit settlements to $25,000 for a single person’s injuries, $50,000 for all injuries sustained in the accident, and $10,000 for property damage (usually the other vehicle involved in the accident).

Imagine that you are driving alone and are hit by a driver who runs a red light, causing $50,000 in medical bills, lost wages, pain and suffering, etc. If the at-fault driver carries the bare minimum liability insurance, your settlement will be capped by their policy limit at $25,000 if you only pursue their auto insurance policy.

Can I get a settlement above the policy limit to cover my additional damages?

While the insurer is not going to pay out an accident settlement that goes above their client’s policy limits, it is possible to sue the at-fault driver or pursue other options. A car accident attorney will look for other insurance policies and sometimes income/assets to determine whether it is possible to get more compensation for their injured client.

Here are some options that your personal injury attorney may look at for pursuing recovery beyond the at-fault driver’s policy limits:

1. Umbrella policy

Some people purchase umbrella policies that provide liability coverage above and beyond what their home and auto policies cover. These policies are more common among wealthy individuals and corporations.

2. Accident with multiple defendants

If there is more than one driver or entity at-fault for the accident, then you may be able to recover under multiple insurance policies. Added together they can equal a full and fair settlement.

3. Personal judgment against the defendant

In some cases, it’s possible to recover the remaining judgment by garnishing the defendant’s wages or putting a lien on their property.

4. Bad faith

If an insurance company acts in bad faith by denying a legitimate accident claim that it knows should be approved and refuses to offer a reasonable settlement up to the client’s policy limits, then a jury could award damages greater than the insurance limits.

It is a good idea to carry underinsured motorist coverage because it can supplement the other driver’s insurance. The way it works is if you have already gotten a settlement up to the at-fault driver’s policy limits but you still have more damages, then you can make a claim against your underinsured motorist coverage to supplement the compensation you receive so that all your damages are covered.

Seek the help of a car accident lawyer

If you or a loved one was injured in a collision because of the negligence of another, contact a personal injury lawyer to discuss your legal rights. Let an experienced car accident attorney fight for the full compensation that you deserve. It is not uncommon to receive a settlement from the insurance company that is five to ten times larger with the help of a lawyer. Call the personal injury lawyers at Tario & Associates, P.S. in Bellingham, WA today for a FREE consultation! We have been representing residents of Whatcom County, Skagit County, Island County and Snohomish County since 1979. You will pay nothing up front and no attorney fees at all unless we recover damages for you!

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