Can You Sue for More Than Insurance Limits?

Generally, insurance only pays up to the policy’s stated limits, and once that cap is reached, the at-fault party will be responsible for any extra costs. But in some cases, you may be able to recover the additional damages through their personal assets, umbrella policies, or by holding the insurance company accountable if it acted in bad faith.

So, yes, you can sue for more than the insurance limits if your damages are higher than what the at-fault party’s policy covers. However, collecting beyond the policy limits can be challenging, and that’s why it’s crucial to work with an experienced personal injury attorney who can represent and guide you throughout the process.

At Saeedian Law Group, we’ve helped individuals affected by personal injury in California recover over $100 million in compensation. With 16+ years of experience, our team of expert personal injury attorneys can help you investigate assets, pursue additional liable parties, and negotiate for the maximum possible compensation. Schedule a free consultation with us today to discuss your case.

This blog explains how insurance limits work, when you can sue for more than those limits, how courts calculate damages, and what to do if the defendant can’t pay beyond their insurance.

What Are Insurance Limits and How Do They Work?

Insurance limits are the maximum amounts an insurance company will pay for a covered claim under a policy. They tell you how much protection you actually have under your policy. The goal of the limit is to determine the insurer’s financial responsibility and protect the company from unlimited payouts. Understanding these limits is important because they directly affect how much coverage you actually have if you’re involved in an accident or loss.

There are two main types of insurance limits, based on how the limits are calculated. They are the aggregate limits and per-claim or per-occurrence limits. Aggregate limit sets the total amount the insurance company will pay for all claims during a specific policy period, such as annually. On the other hand, a per-claim limit sets the maximum payout for a single incident.

Let’s say you have car insurance with a bodily injury limit of $50,000 per person. If you’re at fault in an accident and the other driver’s medical expenses are $40,000, your insurance will cover them. But if their medical bills are $70,000, your auto insurance policy will only pay $50,000, since they cannot exceed the policy limit.

Insurance limits also vary by coverage type. Auto insurance usually sets separate limits for bodily injury per person, bodily injury per accident, and property damage. If your damages exceed the policy’s limits, you may be personally responsible for the remaining costs. That’s why some people choose higher coverage amounts or additional protection like umbrella policies.

Can You Sue For More Than Insurance Limits?

Yes, you can sue for more than the insurance limits. If your damages are higher than the at-fault party’s insurance limits, you are allowed to sue them for the full value of your losses. However, whether you can actually collect that extra money depends on the situation.

For example, if the at-fault party’s auto insurance policy limit is $50,000 but your damages cost $100,000, you can still file a lawsuit for the entire $100,000. The insurer pays to the limit of $50,000, and the at-fault party would be legally responsible for the remaining $50,000.

Most times, the challenge is being able to collect beyond the limits. In most cases, many people who carry low insurance coverage do not have enough assets or income to pay large judgments. However, if the defendant owns property, runs a business, or has other financial resources, you may be able to recover more.

In some cases, you may rely on other types of coverage, such as umbrella insurance or an employer’s policy. An umbrella insurance policy is an extra liability coverage that protects you when the limits of your regular insurance policies are not enough. It is called “umbrella” because it sits on top of your auto, homeowners, or renters insurance and provides additional protection.

When Can You Sue Beyond Insurance Coverage?

Generally, you can sue beyond insurance coverage when your damages are higher than the at-fault party’s insurance limits. As mentioned earlier, the insurance company will only pay up to the maximum stated in the policy. If your damages exceed policy limits, you still have the right to file a lawsuit against the person or business responsible for the accident.

You can also sue beyond insurance limits if the defendant has an umbrella policy. Additionally, if the insurance company acted in bad faith, you may sue the insurance company itself for the full amount of your damages, even beyond the original limits. An example of acting in bad faith is refusing a reasonable settlement amount within the policy limits.

How Do Courts Determine the Amount You Can Sue For?

Courts determine the amount you can sue for based on the actual damages you suffered and the legal claims you bring. The idea is to compensate for your losses, not to punish the other party, unless punitive damages are involved.

• First, the court considers the economic damages, which include medical bills, property repair or replacement, lost income, and other measurable financial losses. You’ll need to show evidence such as receipts, medical records, or payment records.
• Second, the court may consider non-economic damages such as pain and suffering, emotional distress, or loss of enjoyment of life. These factors are harder to measure, so judges or juries often decide the amount based on the severity of the injury and its impact on your life.
• In some cases, if the defendant acted with extreme recklessness or intentional misconduct, the court might award punitive damages. These go beyond your actual losses and are meant to punish the wrongdoer and discourage similar behavior.

How Can You Sue for More Than Insurance Limits?

In a personal injury lawsuit, recovering compensation beyond the other party’s insurance limits requires an in-depth understanding of the steps involved. Here, we’ve provided a step-by-step approach to guide you.

1. Assess the Total Damages

The first step is to figure out the full value of your losses. Add up medical bills, hospital stays, therapy costs, and any ongoing treatment you may need. Don’t forget lost wages if severe injuries kept you from working, and lost future earning capacity if you can’t return to the same job. Include property damage, such as the repair or replacement of a car after an accident.

You should also consider non-economic damages like pain and suffering, emotional distress, or loss of enjoyment of life. For example, if you can no longer play sports with your kids because of a car accident injury, that loss of enjoyment may count toward your claim. By calculating the true total of your damages, you’ll see exactly how much goes beyond the insurance policy limits.

2. Identify All Responsible Parties

Sometimes, more than one person or business shares responsibility for your injuries. In these cases, you may be able to seek compensation from the different parties involved. This is especially important if one defendant has low insurance coverage but others have higher policies or more assets.

By identifying every potentially responsible party, you expand the chances of recovering the full amount of your damages. For example, in a car accident, the at-fault driver might share liability with the employer who required them to drive. In a slip-and-fall accident, both the store owner and the property management company may share liability.

3. Consider the Defendant’s Personal Assets

If your damages are more than the insurance limits, you can try to collect the difference directly from the at-fault party. Courts allow you to seek payment from their personal assets, such as bank accounts, vehicles, or real estate. In some cases, wages can even be garnished to satisfy a judgment.

However, the ability to collect depends on the defendant’s financial situation. If they don’t have much, you may win a judgment but struggle to collect it. On the other hand, if the defendant owns valuable property or runs a profitable business, pursuing their assets can be worthwhile. That’s part of the reason why you should get a personal injury attorney to help investigate what assets might be available and legally reachable.

4. Negotiate or File a Lawsuit

Before going to trial, you or your lawyer may attempt to negotiate with the at-fault party or their insurer to settle for more than the policy limits. Sometimes, insurers agree to pay more to avoid the risk of a larger court judgment, especially if their refusal could be seen as acting in bad faith.

If settlement talks fail, the next step is filing a lawsuit. In court, you can present your evidence and argue for the full amount of damages. If you win, the court may issue a judgment that goes beyond the insurance coverage, allowing you to collect from personal assets or other liable parties. For example, if your medical bills total $200,000 and the policy covers only $50,000, a successful lawsuit could award you the additional $150,000 directly from the defendant.

5. Work With a Skilled Personal Injury Attorney

Handling claims that exceed insurance limits can be complex, especially if it involves serious injuries. Hence, you need a personal injury lawyer experienced in high-value cases to guide you through the process. They’ll help you identify all possible sources of compensation beyond your own auto insurance policy, and protect your rights. They can also handle settlement negotiations, gather expert testimony, and take the case to trial if needed.

An attorney can also advise you on whether the insurance company acted in bad faith by refusing to settle within policy limits. In some states, proving bad faith can make the insurer pay the entire judgment, even if it exceeds the policy’s coverage. This strategy can be critical for accident victims who suffer catastrophic injuries or large financial losses.

What Happens if the Defendant Can’t Pay More Than Their Insurance?

If the defendant cannot pay more than their insurance covers, you may face challenges in how much money you can realistically recover. In practice, many people who carry only minimum insurance coverage do not have enough assets to cover large judgments. Even if you win the personal injury claim, the defendant may not have money in the bank, valuable property, or wages that can be garnished.

Sometimes, defendants even declare bankruptcy to avoid paying, which can wipe out certain types of judgments. But if the defendant has assets or income, you may be able to enforce the judgment through different collection tools.

• One method is wage garnishment, where a portion of the defendant’s paycheck is withheld and sent directly to you until the judgment is satisfied.
• Another method of collection is placing a lien on property, such as real estate. With a lien, the defendant cannot sell or refinance the property without paying you. You may also use a bank levy, which allows funds to be taken directly from the defendant’s bank account.
• In addition, courts may order a judgment debtor’s exam, where the defendant must disclose their financial situation under oath. This can reveal hidden assets or income streams that may be used to satisfy the judgment. However, collection is still subject to state laws, which often protect certain income and property like retirement accounts, primary residences, or wages up to a certain amount.
• Because collection can be complex, it’s best to work with an attorney or a judgment collection specialist. These professionals understand state-specific rules and know how to identify assets, and use the legal system to enforce payment. In some cases, simply having a judgment on record can pressure the defendant to pay over time, since judgments can stay in place for years and harm their credit until resolved.

Can Settlements Be Negotiated Over Insurance Limits?

Yes, settlements can be negotiated for amounts over insurance limits, but it depends on the circumstances and the willingness of the parties involved. For example, if the defendant has valuable personal assets, they may agree to pay additional money out of pocket to avoid a trial and a larger judgment.

In other cases, the insurer may choose to settle for more than the policy limit if they fear being sued for bad faith, which can expose the company to unlimited liability if it unreasonably refuses a fair settlement.

Note that such negotiations often focus on finding creative solutions. A defendant might offer a structured payment plan for the portion above insurance. In some cases, a settlement can also involve reducing medical liens or bills to help close the gap between damages and insurance coverage.

In some other cases, lawyers may also look for other sources of recovery, such as umbrella policies, employer coverage, or additional defendants who share responsibility. Ultimately, how successful the negotiations go depends on the experience and expertise of your attorney and the willingness of the other parties involved.

Looking to Secure Full Compensation for Your Case?

Although it is possible to sue for more than the at-fault party’s insurance limits, recovering that extra amount requires a careful strategy. You may need to pursue their personal assets, identify additional liable parties, or prove that the insurer acted in bad faith. Because these steps can be complex and highly technical, having a skilled attorney on your side is essential to boost your chances of full recovery.

At Saeedian Law Group, our California personal injury lawyers have over 16 years of experience helping accident victims recover maximum compensation, even in cases that go far beyond insurance coverage. If your damages exceed the available policy limits, contact us today for a free consultation. We’ll fight to protect your rights and pursue every possible source of compensation on your behalf.

FAQ

At Saeedian Law Group, we’ve been handling personal injury cases for over a decade. We understand that you may be wondering how far insurance coverage really goes and what happens if damages are higher than the limits. That’s why our experienced personal injury lawyers have compiled comprehensive answers to some of the most common questions to guide you.

Do Personal Injury Lawyers Recommend Suing Beyond Insurance Limits?

Personal injury lawyers may recommend suing beyond insurance limits when the damages clearly exceed the policy and there are other ways to collect additional compensation. This could include pursuing the defendant’s personal assets, identifying additional defendants, or uncovering umbrella policies. However, if the defendant has little to no money or assets, a lawyer may advise against it since collecting more than the insurance payout may not be realistic.

What Is the Maximum Amount an Insurance Company Will Pay?

The maximum amount is determined by the policy limits listed in the insurance contract. For example, an auto policy might cover $50,000 per person and $100,000 per accident, and the insurer will not pay beyond those numbers. Even if your accident expenses or medical costs are far higher, the company’s obligation ends once it pays the limit. This is why carrying higher coverage can protect both you and your assets.

Will Insurance Pay Over Limits?

In most cases, insurance companies do not pay more than the policy limits. However, other forms of coverage, such as an umbrella policy, can come in handy. Another exception is when the insurer is forced to pay more due to acting in bad faith by refusing a reasonable settlement. In those cases, courts can hold the insurance company liable for the entire judgment, even if it exceeds the policy.