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What Is a Policy Limit Settlement?

Getting into an accident can turn your life upside down, physically, emotionally, and financially. If you’re dealing with the aftermath, one of the most important things to understand is how insurance policy limits can impact what kind of compensation you might receive.

 

Our New York personal injury lawyers explain policy limit settlements, how they work, and why they play such a big role in personal injury claims below!

What Is a Policy Limit?

When it comes to car insurance, a policy limit is the most your insurance company will pay for a covered accident. In New York, all drivers must have at least a certain amount of liability coverage.

Pre-Person Limit vs. Per-Accident Limit

The per-person limit is the maximum amount your insurance will pay for injuries to any one person in an accident. So, if your policy has a per-person limit of $25,000, that’s the most your insurance will pay for one person’s injuries, no matter how high their medical bills are.

 

A per-accident limit is the total amount your insurance will pay for all injuries in a single accident, across everyone involved. For example, if your policy has a $50,000 per-accident limit, that’s the total payout your insurance will make for everyone’s injuries combined, even if multiple people are hurt.

What Is a Policy Limit Settlement?

A policy limit settlement happens when the insurance company agrees to pay the full amount allowed by the policy to settle a personal injury claim; this usually comes into play when someone is seriously hurt and the cost of their injuries is more than what the insurance covers.

What Happens When Your Damages Surpass Policy Limits?

If your injuries and other losses from an accident cost more than what the at-fault driver’s insurance will pay, you could be left with uncovered expenses. That said, there are still a few paths you can explore to try and recover the full amount you’re owed

Look Into Other Insurance Coverage

If the other driver’s policy doesn’t cover all your expenses, your own insurance might be able to help. For example, if you have underinsured motorist coverage, it can kick in to help cover the difference between what the other driver’s insurance pays and what you actually need; this is especially when you’re facing major medical bills or long-term recovery costs.

See If Anyone Else Might Be Liable

Sometimes, more than one person is responsible for an accident. If that’s the case, you may be able to file claims against multiple insurance policies. For instance, if the accident involved another driver, a company vehicle, or poor road conditions maintained by a third party, you might be able to hold them accountable, too.

Consider Suing the At-Fault Driver Personally

If insurance doesn't fully cover your losses and no other parties are responsible, you might consider taking legal action against the person who caused the accident. But keep in mind, if that person doesn’t have significant assets, you may win a judgment but never actually collect the money. It’s worth talking to a lawyer to see if this route is realistic in your situation.

What Is a Policy Limit Demand?

A policy limit demand is when your lawyer formally asks the insurance company to pay out the full amount of coverage available in a claim. To start the process, your attorney sends a demand letter that explains what happened, how severe your injuries are, and why you’re asking for the full policy limit to the insurance company.

What Should a Policy Demand Letter Include?

It should clearly explain what happened in the accident (when and where it occurred) and describe your injuries and financial losses, backed up with things like medical records and proof of lost income. It also needs to reference the at-fault party’s insurance policy, including the coverage limits, and make a solid case for why you deserve the full amount.

 

Getting all of this right will help your attorney put pressure on the insurance company to settle fairly and quickly.

Bad Faith and Insurance Policy Limits

Insurance companies are supposed to handle claims honestly, which is known as acting in good faith. However, they could be acting in bad faith if they refuse to settle a valid claim within the policy limits without a good reason. When that happens, they might be held responsible for more than the policy limit, especially if a court finds they didn’t do their job properly.

 

If you think your insurer is acting in bad faith, you might be able to file a separate claim against them. These cases can be challenging to prove, since you have to show that the insurance company intentionally ignored its responsibility to pay what it owed. Still, with the right legal help, it’s possible to hold them accountable.

Why Should I Work with a Personal Injury Attorney?

Dealing with insurance companies, especially when policy limits are involved, can get pretty complicated. That’s why having a personal injury attorney in your corner can make all the difference.

 

  • They Know How to Negotiate. Insurance policies can be confusing, but experienced injury attorneys know how to break them down and use them to your advantage. They’ll handle the back-and-forth with the insurance company and fight to get the maximum compensation you’re entitled to.
  • They’ll Guide You Through the Process. From paperwork to deadlines, there’s a lot to keep track of. A lawyer makes sure you understand your options every step of the way and helps you make informed choices.
  • They Can Improve Odds. The truth is, people who work with a lawyer often end up with better settlements than those who go it alone. A good attorney knows how to build a strong case and push for a fair outcome.

Key Takeaways

A policy limit settlement occurs when an insurance company agrees to pay the maximum amount covered by the policy to resolve a personal injury claim.

You may be able to file a personal injury claim against the at-fault driver if your injuries meet New York's legal standard for a "serious injury."

A policy limit demand is a formal request from your attorney to the insurance company, demanding payment of the total available insurance coverage for a claim

Have Questions? Schedule Your Free Consultation Today!

At Field Law Group, we’re dedicated to protecting our clients’ rights and making sure they receive the benefits they’re entitled to.

 

Contact us today or call 212-739-7278 to schedule a FREE consultation with our firm.

 

About the Firm: With over a decade of experience, Field Law Group has been helping personal injury victims across New York since 2013. We’re dedicated to protecting the rights of accident victims and fighting to get them the compensation they deserve.

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