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When you purchase an insurance policy, it is a type of financial guarantee that an insurance company will cover your damages or losses.
However, an insurance company will only be liable for covering damages (medical bills, lost wages, and more) up to the policy limits in the insurance policy. Let’s explore with our Los Angeles injury insurance attorneys.
Let’s look at how insurance policy limits work and what could happen if you get sued more than what your insurance covers.
Policy limits are the maximum amount an insurance provider is willing to pay for any incident the insurance policy covers.
For example, if you have car insurance with a policy limit of $30,000, the insurer will pay for the other party’s damages up to $30,000 in an accident that you cause. However, if the damages are $50,000, then in most cases, the insurer is not liable for the extra $20,000 above the policy limit on a standard car insurance policy.
An insurance provider might deny claims within the policy limits to ensure a healthy profit, but it is acting in bad faith at the end of the day. If an insured agrees on a lower settlement amount and the insurer refuses to pay the claim without any reasonable explanation, the insured can file a lawsuit against the company for acting in bad faith.
In such lawsuits, the court and the judge will award the insured a maximum payout as a punishment to the insurance provider for not demonstrating the duty of care.
We’ve discussed situations where you can claim more than the coverage. Let’s look at the situation another way around. What happens if the other party sues you for more than your coverage?
The same California insurance law applies here, where insurance providers are not liable for any damages above an insured’s insurance coverage. Suppose you were in an accident that was your fault and the auto accident settlements exceeded your coverage. In that case, the company will deny or process payments up to the insurance policy limit.
You can expect the injured person to come after you by suing you for damages if the insurance company pays less than their damages. This can impact your reputation among your social circle and colleagues at work. However, if you don’t have any financial assets to pay, the injured person may not get their full injury compensation.
If the claim exceeds policy limits, one can not ask the at-fault driver’s insurance provider to pay more. Because of this, the other party may take the following actions.
The other party can use umbrella policies to get additional compensation or coverage for their loss. A personal injury lawyer can guide you if there are any umbrella policies or multiple insurance policies that the driver can draw benefits on.
If your auto insurance coverage is lower than the damage done in a car accident to the other driver by yourself, then you can expect the other driver to file multiple lawsuits. An injured car accident victim can file lawsuits against multiple people if more people are in the car accident besides the at-fault driver.
If you’re sued for more than your coverage, contact Ehline Law to help protect your rights. We have substantial experience dealing with personal injury cases and maintain a strong professional attorney-client relationship. Our results and achievements talk for themselves.
Contact us at (213) 596-9642 and get a free consultation with an expert attorney for legal representation today!
Michael is a managing partner at the nationwide Ehline Law Firm, Personal Injury Attorneys, APLC. He’s an inactive Marine and became a lawyer in the California State Bar Law Office Study Program, later receiving his J.D. from UWLA School of Law. Michael has won some of the world’s largest motorcycle accident settlements.