Do policy limits affect my personal injury claim?
Whether the responsible party’s policy limits affect the amount of a settlement in a personal injury claim depends on whether the responsible party is a private party, or a business.
If the claim is against a private party, and there are no other avenues of recovery, then assuming your case has a value that is in excess of the policy limits, your settlement will be limited to the amount of the insurance policy in place for the responsible party.
Though a lawsuit can be filed against the responsible party, if the case is won in court, the defendant will most likely file for bankruptcy, which will discharge all of his or her debt including any potential verdict you obtain against them in court. At that time, the insurance company will again tender the responsible party’s policy limits to settle the claim. Therefore, it makes no sense to spend time and money fighting the case in court against a private party if you are attempting to collect more than the available policy limits because doing so will not result in you receiving more than the limits of the policy.
On the other hand, if the claim is against a business, and the business is thriving, it is not likely that that business owner will declare bankruptcy to avoid paying money to you because in order to declare bankruptcy, the owner of the business must turn the business over to the bankruptcy trustee. Therefore, if a business has policy limits, the claim against the business can still be fought in court because the business owner will not shut down their operation to avoid paying out on the claim.
In all claims, an experienced personal injury attorney will investigate whether there are other policies of insurance through which the claim can be asserted, including excess policies, umbrella policies, and uninsured motorist policies. An experienced lawyer will also analyze the case to determine all parties that are potentially liable for causing the accident and file claims against them as well as the party that is clearly at fault. Doing so will allow you to collect compensation from the additional party or parties, which will result in a settlement that is for more than the responsible party’s policy limits.