Learn when insurance companies will pay out above their policy limits.
In most cases, the insurance company is the primary source of compensation for a personal injury claim. However, this can present a difficulty if you have suffered damages in excess of the limits of the insurance policy held by the individual or corporation responsible for your injury.
Here is an example.
You were in a car accident resulting in serious injuries that caused medical expenses, pain and suffering, loss of income, and other damages totaling $150,000. The driver who caused the accident only had $100,000 in insurance coverage. So where is the additional $50,000 you need supposed to come from?
Ordinarily, judgements in excess of the policy limit must be paid out of pocket by the defendant. This creates a serious barrier to timely compensation because many defendants do not have the sort of cash lying around that is required to pay such a judgement. You may have to seek additional court actions such as garnishing the defendant’s wages in order to secure your compensation, resulting in your compensation coming in at a trickle. This may not be sufficient to allow you to pay your own expenses on time.
But…
…there is an important exception to watch out for here.
If you initially requested an amount within the policy limits but the insurance company unreasonably refused to settle, and you later win a judgement in excess of the policy limits, the insurance company will most likely end up paying the entire judgement.
Why?
Because of a concept called insurance bad faith.
When the insurance company fails to reasonably settle a claim and a larger amount of damages are won in court, they have actually wronged their client. In other words, the insurance company’s wrongful denial of a settlement is the entire reason that the defendant now finds themselves owing money out of pocket to the plaintiff. In such a case, the defendant can actually sue their carrier for the difference via a claim of insurance bad faith. The end result is that the injured victim ends up receiving all the compensation they have won from the insurance company, with no need for the hassles and delays of pursuing further actions against the defendant personally.
Bottom Line
There are some cases in which it is worthwhile pursuing damages in excess of the defendant’s insurance policy limits. For best results, always consult an experienced personal injury attorney such as Fernando D. Vargas for advice before undertaking any interactions with the insurance company. Attorney Vargas can advise you of the amount of compensation that may be appropriate to seek and secure the evidence and documentation needed to justify it.
