What Happens When Car Accident Claims Exceed Insurance Limits

June 12, 2024

When a car accident claim exceeds insurance limits, it can pose significant financial challenges for those involved. Understanding the intricacies of insurance policy limits and the steps to take in such scenarios is crucial to mitigate financial risk and ensure fair compensation.

## Insurance Policy Limits

### Definition and Examples

A car insurance policy limit is the maximum amount an insurance company will pay after an accident. These limits are often divided into bodily injury and property damage limits. For instance, in Rhode Island, the bodily liability coverage is $25,000 per person and $50,000 per accident.

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### Frequency of Exceeding Policy Limits

While the average bodily injury claim in 2020 was $20,235 and the average property damage claim was $4,711, severe injuries and extended hospital stays can easily exceed policy limits. For example, hospital costs can run up to $4,000 per day, quickly surpassing even generous policy limits.

## What Happens if Medical Bills Exceed Policy Limits?

### Insurance Company’s Obligations

Insurance companies are designed to make a profit and are not obligated to pay beyond policy limits. If the costs from an accident exceed these limits, the financial burden falls on the policyholder or the injured party.

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### Legal Actions Beyond Insurance Limits

When claims exceed insurance limits, various avenues may be pursued for compensation:

#### Umbrella Policies

These policies can cover expenses that go beyond regular insurance limits, providing an additional layer of financial protection.

#### Underinsured Motorist Coverage (UIM)

UIM can be utilized if your own insurance covers damages exceeding the at-fault driver's policy limit.

#### Personal Injury Lawsuit Against At-Fault Driver

If one can prove negligence, this type of lawsuit can result in compensation directly from the at-fault driver. In multi-vehicle accidents, lawsuits may be filed against multiple parties under pure comparative negligence, which helps distribute the financial burden.

## Importance of Legal Assistance

### Role of Car Accident Lawyers

Hiring a car accident lawyer can be critical in navigating complex scenarios where claims exceed insurance limits. Legal expertise can make a significant difference in negotiating with insurance companies and pursuing additional compensation avenues.

### Example: Petrarca Law

Firms like Petrarca Law provide essential guidance and aggressively pursue maximum financial compensation for clients, particularly when claims surpass policy limits. They offer a comprehensive strategy to ensure no stone is left unturned in seeking deserved compensation.

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## Additional Considerations

### Preventive Measures

It’s important to carry adequate insurance coverage to minimize the risk of exceeding policy limits. Regularly review and evaluate your insurance policies to ensure they meet potential needs. Additionally, having an emergency fund for out-of-pocket expenses can be a strategic move.

### Protecting Assets Post-Accident

Reviewing your insurance policy to understand its limits, tracking all accident-related expenses, and considering setting up a trust to protect your assets can be prudent steps. It's also advisable to seek legal consultation to navigate the aftermath effectively.

### Contacting Legal Experts

If faced with expenses that exceed your insurance limits, consulting a personal injury attorney is crucial. They can provide pivotal guidance and potentially explore untapped avenues for compensation. For instance, reaching out to firms like Petrarca Law for a free consultation can be the first step towards assessing your case and understanding your legal options.

By understanding the landscape of car accident claims exceeding insurance limits, you can prepare and navigate these challenging scenarios more effectively. Balancing adequate coverage with strategic legal guidance ensures you are well-equipped to handle situations that stretch beyond your insurance policy limits.

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