Why Can’t I Get More Money? How Insurance Policy Limits Work

As a personal injury attorney in Dallas, I have represented clients with some pretty serious injuries resulting from car accidents:  Broken arms, broken, legs, traumatic brain injuries, surgeries, etc.  I have also encountered difficulties in explaining to those clients that their recovery may be limited based upon the amount of insurance that is available.  This is especially true in car accident cases involving personal automobiles.

Of course, if someone is injured by a commercial vehicle, such as a 18 wheeler or company car, there may be plenty of insurance coverage to properly compensate an injured accident victim.  But, what happens when the accident is covered by a relatively small personal auto insurance policy?  Here’s how most automobile insurance policy limits work:

Every Insurance Policy Has Coverage Limits.

You have to first know that there is no such thing as an unlimited liability policy.  Every insurance policy in the world has limits to its coverage.  This means that the insurance company may be liable to pay for a covered accident only up to the limits of the policy.  This is true even if the value of your injury claim is worth more than the policy limits.

Can I sue For More than the Policy limits?

Yes you can.  You can sue for any amount you want.  With that said, that doesn’t mean you will get a judge or jury to award what you want.  And, even more importantly, you might not be able to collect any amount especially if the liable party had a relatively small insurance policy.  So, as a legal matter, you might be able to get a huge judgment.  But as a practical matter, you may not be able to collect it if the insurance proceeds are not there.

How Do the Policy Limits Come into Play on my Injury Case?

Every automobile liability policy in Texas must be issued with certain minimum coverage limits for bodily injury claims.  There are two types of policy limits for any auto policy:  a “per-person” limit, and a “per-accident” limit.

Of course, you may choose to purchase as much coverage as you want.  But you are only required by law to carry the minimum coverage limit.  From time to time, the Texas Legislature increases these minimum standards as they see fit.  So, the limits discussed here are based upon the law in effect at the time of this article.

The “Per-Person” Limit.

In Texas, the minimum limits for bodily injury coverage for any one person is $30,000.  That means the insurance company is only obligated to pay up to $30,000 to any one person for their injury.  This is true even if the injuries are very severe and the claim is worth more.

The “Per-Accident” Limit.

This coverage comes into play only when there are two or more injured people.  In Texas, the minimum limits of bodily injury coverage for any one accident is $60,000.  That means that the insurance company is only obligated to pay no more than $60,000 for any one accident regardless of how many people are injured.

For instance, if two or more people were injured in an accident, then each person’s injury claim would be paid subject to a limit of $30,000 per person.  At the same time, the insurance company is also limited to pay no more than $60,000 for the entire accident.  If one person is more severely injured than the others, then the insurance adjuster may agree to give that single party the per-person limit of $30,000, and divide the remaining $30,000 between the other injured parties in some “equitable” manner.  Either way, no one person is eligible to collect more than $30,000, and the insurance company is not obligated to pay more than $60,000 collectively for all of the injured claimants.

What if two or more people were very seriously injured?

If only two people were seriously injured, then the insurance company would probably just agree to pay the per-person limit of $30,000 for each person.  However, if three or more people have very serious injuries, then even more problems arise.

Remember that the insurance company is only obligated to pay up to $60,000 per accident.  That means this cap of $60,000 has to be divided up in some manner to satisfy all the injured parties.  The insurance company can decide to divide the $60,000 evenly, or may choose to divide the $60,000 to each claimant proportionately based on their medical bills.  Or, other factors may be taken into consideration such as physical impairment, scarring, future medical treatment, whether the injured party is a minor child, etc., etc.

Either way, all the parties will have to come to some agreement on how to split the per-accident policy proceeds.  If an agreement cannot be reached, then the insurance adjuster may decide not to settle with anyone until some agreement can be reached on how to divide the money.

The Long and Short of It….

As I stated earlier, these examples are based upon the liable party carrying only a minimum auto liability policy.  Even though everyone is free to purchase more coverage, the reality is that the vast majority of the general public only carries a minimum policy.  That doesn’t mean that an injured party must accept the insurance proceeds.  The injured party is not required to accept the policy proceeds.  He may elect to pursue the claim in court against the responsible party.  But most likely, your only chance of collecting any money would be to take what the insurance company provides.

That is because most people are “judgment proof” or just do not have the attachable assets to pay for a sizable civil judgment.  Furthermore, it is nearly impossible to collect on a judgment from a private person even if they do have attachable “non-exempt” assets.  And if you do get your judgment, find the assets, and try to attach those assets, they can always file bankruptcy.  If that happens, then you will just end up getting the insurance proceeds anyway and the rest of your judgment will most likely be discharged.

At the same time, anyone who has valuable “non-exempt” assets would be taking a big risk driving around with a minimum policy.  It is highly unlikely that a millionaire has a minimum policy.  But most lower and middle class drivers feel that a minimum policy is all they need to protect their assets.  And, because Texas law has such a long list of assets that are exempt from attachment anyway, they would probably be right.

So, under most circumstances,  the long and short of it is this:  You are legally allowed to sue for any amount that you want.  But, practically speaking, the proceeds of the insurance policy is your best chance of actually collecting any money.

Under these circumstances, you still benefit to hire a personal injury attorney.  Your lawyer will investigate, manage, and present your case so as to maximize the amount the insurance company pays for your injuries.  Thereafter, your lawyer will also work to negotiate any medical bills, liens, or subrogation claims so as to maximize the net recovery to your pocket.