Any type of car accident is a stressful experience, and dealing with the aftermath of an accident often adds to the strain. This is especially true if your car accident claim exceeds policy coverage of the insurance that’s supposed to cover the expenses — whether it’s your own insurance policy, or that of the other driver if someone else was at fault for the accident.
In this article, we’ll explain how often car accident claim exceeds policy coverage or limits, and what you can do if your coverage or the other driver’s falls short of covering your expenses. And be sure to take care of this right away. Companies have what’s called a Claim Time Limit. This means if you don’t hurry, you’ll be out of luck. See our explanation of USAA’s auto insurance claim time limit policy for a sample of what the policies are like.
Understanding Policy Limits
Insurance policies can be confusing, especially if you’ve never had to file a claim before. The first thing to understand is that car insurance policies have several different types of coverage. The most common of these are:
- Bodily injury liability: Auto insurance policies have two types of bodily injury liability coverage — per-person (individual) bodily injury and per-accident (group) bodily injury — which are used to cover medical expenses as a result of accidents.
- Property damage liability: This type of coverage is used for accident expenses when you damage someone’s property, such as another vehicle.
- Uninsured/underinsured motorist: This coverage will help cover the expenses if another person causes an accident and doesn’t have enough insurance to cover the damage. There are several types of uninsured/underinsured motorist coverage, usually indicated on your insurance policy with abbreviations:
- Uninsured motorist (general): UM
- Underinsured motorist (general): UIM
- Uninsured motorist bodily injury: UMBI
- Uninsured motorist property damage: UMPD
- Personal injury protection: Also referred to as PIP or no-fault, this coverage is usually provided as per-person and per-accident limits, and is used to cover things such as medical expenses, rehabilitation, disability, or loss of income caused by a car accident.
The requirements for carrying these types of insurance coverage vary by state, but most states require at least bodily and property damage liability insurance. Some states also required uninsured motorist and personal injury protection. There is also a minimum dollar amount of coverage per insurance type set by each state.
You can view a current list of minimum car insurance requirements by state.
What Do the Numbers Mean on Your Insurance Policy?
Auto insurance liability limits appear on your insurance cards as a series of three numbers, such as 25/50/10. The first number is the maximum individual bodily injury liability, the second is the maximum group bodily injury liability, and the third is maximum property damage liability. These numbers represent thousands of dollars, so a 25/50/10 policy would have $25,000 in individual bodily injury, $50,000 in group bodily injury, and $10,000 in property damage coverage.
When viewing your full insurance policy, the full names and amounts of your coverage are listed on the declarations page, which is usually the first page of the document. This page shows exactly how much coverage you have for each type available, in whole dollar amounts. In addition to liability, UM/UIM, and PIP, other types of coverage an insurance policy may have include:
- Comprehensive coverage, which provides coverage for damages to your vehicle from theft, vandalism, fire, and natural disasters
- Collision coverage, which provides additional coverage for multi-car accidents, as well as single-car collisions, such as if you hit a fence or a tree
Generally, comprehensive and collision coverage are optional.
How Often Do Auto Accident Settlements Exceed the Policy Limits?
Fortunately, car accident claims do not often exceed the limits of the insurance policy they’re filed against. Most claims are well under the limits. Even if the insurance policy has minimum coverage, the range of minimum coverage in most states is $15,000 to $50,000 for per-person bodily injury, $30,000 to $60,000 for per-accident bodily injury, and $10,000 to $25,000 for property damage.
According to 2015 statistics from the Insurance Information Institute, the average bodily injury claim for car accidents was $17,024, and the average property damage claim was $3,493. Property damage claims, such as damage to your vehicle, are typically well within policy limits. In most cases, bodily injury claims also meet or fall below the per-person limits, and additional expenses can be met with the per-accident limits.
However, in some cases, insurance claims may exceed the policy limits. Continue on if you find out a claim exceeds policy limits.
What You Can Do If Your Claim Exceeds the Policy’s Limits
“Car accident claim exceeds policy coverage.” is a very bad thing to read.
The first thing to consider in a car accident claim is whether your own insurance or another driver’s policy will be covering your expenses. This depends on who is liable, or at fault, for the accident. Usually in a multi-car accident, liability rests with the driver of the vehicle that hit the other vehicle, although circumstances such as weather, road conditions, and negligence on the part of either driver can impact liability.
Once liability is established, you may end up filing a claim against the other driver’s insurance policy. Even if you are not liable, your own insurance company may also require you to file a claim, which can help you recover additional expenses.
Here are some things you can do if your car accident claim exceeds policy coverage available with your insurance plan.
Claims Filed Against Your Own Insurance Policy
If your insurance policy does not cover your car accident claim, your options depend on whether your accident involved another driver, and whether the other driver is liable or partially liable for the accident. If you are fully liable for the accident, you may not have any recourse to cover the additional expenses, as your insurance company will not pay more than your policy limits.
One thing you can do is prevent this possibility by purchasing additional insurance coverage. Most people simply choose the minimum required coverage for their state when buying car insurance, but the Insurance Information Institute recommends that you have at least $100,000 in per-person bodily injury and $300,000 in per-accident (group bodily injury) coverage.
If UM/UIM and PIP coverage are optional in your state, you may also want to add these types of coverage to your insurance policy to protect yourself in the event of an accident.
Claims Filed Against Another Driver’s Insurance Policy
If you are in a car accident and the other driver is at fault, you’ll file an insurance claim with the at-fault driver’s insurance company. Although this doesn’t happen often, it may turn out that the other driver’s insurance does not completely cover your expenses.
You have a few options in this case:
- File a claim with your own insurance company. Your policy may be able to cover the additional expenses, especially if you have underinsured motorist coverage.
- Recover damages under an umbrella insurance policy. If the at-fault driver has umbrella insurance, they will have additional liability coverage beyond the limits of their personal insurance policy.
- Recover damages personally from the at-fault driver. This may be possible if the other driver is cooperative and willing to admit fault, or you may be able to file a claim in small claims court in an attempt to recover your expenses. However, keep in mind that if the at-fault driver is underinsured, they are not likely to have the ability to pay you additional expenses, even if the judgment is in your favor.
- File a lawsuit against the at-fault driver or another responsible party. If you have large expenses resulting from an accident that aren’t covered by the other driver’s insurance, you may work with a lawyer to sue the at-fault driver or another party who may have been liable for the accident, such as car accidents caused by road construction conditions with poor signage or inefficient barriers — in which case you may be able to name the city where the accident occurred in a lawsuit.
If you’re involved in an accident and need to file a claim, there’s a chance your car accident claim may exceed the policy limits of your insurance plan. If this happens, there are a few things you may be able to do to recover the additional expenses, such as trying to collect personally from the driver liable for the accident or filing a lawsuit against the other driver or the insurance company. However, in many cases, it may not be worth the hassle to try settling for more than the insurance policy limits.