How Often Do Auto Accident Settlements Exceed the Policy Limits?

Many clients often ask me if they can get more than the policy limits for their personal injury case.  My answer is usually the same.  It is highly unlikely, and practically impossible, to get more than the policy limits.

In order to understand why, we must cover some basic legal concepts about how liability insurance works and how it relates to your injury case.

How Liability Insurance Works.

Liability insurance is coverage that people buy in the event they are liable to someone else for injury or damages from an accident.  But, like every other insurance policy, liability insurance has limits.  That means the policy only covers your legal liability up to a certain amount.  Anything over that amount is the responsibility of the policy holder.

Texas law requires every automobile to be covered by basic liability insurance.  These are called “minimum liability limits.”  These minimum limits do change over time.  Since I started as a car accident attorney in Dallas, the minimum limits have increased at least two times.

Texas Minimum Liability Policy Requirements

Currently, Texas law requires that every vehicle be covered by, at least, the following limits:

Bodily injury for any one person:  $30,000.00
Bodily injury for any one accident:  $60,000.00
Property damages for any one accident:  $25,000.00

These are merely the minimum limits required under Texas Law.  You may purchase more coverage if you wish. But these figures represent the current minimum liability coverage required.

$30,000.00, Per Person for Bodily Injury.

This is called the “per-person limit.”  This is the most the insurance company will pay to any one person for bodily injuries sustained in an auto accident.  So, even if the injuries are very serious, this is the most the insurance policy will cover for those injuries.

$60,000.00, Per Accident for Bodily Injuries.

This is called the “per-accident limit.”  If more than one person is injured, the policy will only cover up to this amount for the entire accident.

What if three or more people are injured in the same accident?  Then, each claim is still limited to the “per person” limit.   However, all the injury claims combined are also subject to the “per accident” limit.  So, if three or more people are seriously injured, the policy is still limited to the “per accident” limit for all the injury claims.

$25,000.00, Property Damage Limit.

This is the part of the auto policy that covers damages caused to another person’s property.  This includes things like other vehicles, trailers, guard-rails, and other structures.  Notice that their is no “per person” limit here.  Therefore, the “property damage” limit is how much the policy will cover for all property damages in a single accident.

Some people who have more assets may tend to purchase more coverage.  If you have a lot of cash, property, recreational vehicles, etc., then you might choose to buy more coverage.  But even if you buy more coverage, it will still be limited. So, even though wealthy people may carry a $1,000,000 liability coverage, the insurance company is only liable up to those limits.

Everyone’s financial circumstances are different.  The more vulnerable your assets are, the more likely you are to buy more coverage.

How Your Injury Claim Relates to the Liability Insurance Policy.

As I previously explained, liability insurance is what people buy to cover their liability.  Therefore, the liability coverage is not the injured person’s insurance.  It is the other person’s insurance.  This is the biggest misconception my clients have.

What you have to understand is that your claim is really against the other driver.  Therefore, you must view your injury claim as a legal claim and not a typical insurance claim.

Essentially, the liability insurance company acts on behalf of their driver.  That is because their primary duty and responsibility is to protect and defend their driver from your claim.

DO NOT make the mistake of thinking that the insurance company is acting in your best interest.  It is quite the opposite.  Everything the insurance company does is for the purpose of protecting their at-fault driver.

If I am Injured, Can I Get More Than the Policy Limits?

Now to address the main question.  What are your chances of getting more than the policy limits if you are seriously injured in a car accident?  The answer is that it is highly unlikely that you will get more than the applicable policy limits.

That is because the liable person probably doesn’t have any “non-exempt” assets to cover the judgment.  And, even if he did, going after someone personal assets to satisfy a judgment is no easy task.

Exempt v. Non-Exempt Assets.

Under Texas law, certain assets are exempt from seizure for civil judgments.  These exemptions are found in the Texas Property Code, Sections 41.001 (real property); and  42.001 (personal property). These exemptions include your primary residence, also know as your “homestead;” your car; your wages; other vehicles and equipment used in your trade; personal furnishings; certain retirement accounts; college savings accounts; and so on and so on.

The point I am trying to make is that most people are considered “judgment proof.”  This is legal-slang meaning a judgment may not be enforceable due to that person’s assets being exempt from seizure.

Therefore, although you might obtain a judgment against someone, it may not be collectible.

A Dim Light at the End of the Tunnel: The Stowers Doctrine.

There is one very narrow situation where you might be able to get more than the policy limits.  Let’s say you make a settlement demand to the insurance company for some amount within the policy limits.  The insurance company rejects your demand.  Now, things could get interesting.

The defendant might be very upset with his insurance company if you get a judgment in excess of the policy limits.  This is especially true if the insurance company rejected a “reasonable” opportunity to settle the case.

If the insurance company was negligent in refusing to settle within the policy limits, then the defendant may hold his insurance company liable for any excess judgment.  This is known as the “Stowers Doctirne.” This legal principal derives its name from the 1929 Texas case G.A. Stowers Furniture Company v. American Indemnity Company.

Summary of the Stowers case.

A truck owned by G.A. Stowers Furntiure Company was involved in an accident with another vehicle.  The person in the other vehicle was seriously injured. The company was insured by American Indemnity.  The liability policy limits were $5,000.00. Stowers notified his insurance company of the claim and American Indemnity handled all aspects of the investigation and legal defense.

The case proceeded to trial.  The injured person got a judgment against Stowers Furniture Company for $14,000.00  Afterwards, Stowers discovered that their insurance company rejected an opportunity to settle the injury claim for $4,000.00.

Under these circumstances, you can see why Stowers would have been upset with their insurance company.  Instead of settling when it had the chance, the insurance company elected to role the dice and take their chances at trial.  However, the insurance company was also gambling with their policy-holder’s money.

Therefore, Texas recognizes the Stowers Doctrine.  An insurance company must use reasonable care when handling a claim on behalf of its policy holder.  If an insurance company has a reasonable opportunity to settle a claim for an amount within the policy limits, then the insurance company may be liable to their insured to cover any excess judgment if it fails to settle.

“So, You’re Sayin’ There’s a Chance….”

No, not really.  Because, in order to collect more than the policy limits under the Stowers Doctrine, many things have to happen in a very precise and orderly way.

• You have to give the insurance company an opportunity to settle within the policy limits;
• The insurance company has to reject your settlement demand;
• You have to proceed to trial and obtain a judgment in excess of the policy limits;
• Then convince the defendant to assign his Stowers claim to you;
• Then you proceed in a separate lawsuit against the defendant’s insurance company;
• You have to prove that the insurance adjuster was negligent in refusing to settle the claim when they had the chance.

If, after years of litigation, all these things fall into place, then you might be able to collect more than the policy limits.  Good luck!!!

So, Now What?

Therefore, your best chance of getting any money for your injuries will be whatever you can collect from the other driver’s insurance policy.  If you were seriously injured and there is only a minimum policy, then you are most likely limited to that amount.

You can sue for more.  But even if you get a judgment for a million dollars, $30,000 may be all you can actually collect. So, it doesn’t make any sense to waste your time trying to “squeeze blood from a turnip.”

The trick is having an experienced personal injury attorney on your side.  I have discovered that collecting the money is only half the equation. The real challenge lies in what to do with the money.  You may have to negotiate hospital liens, medicare or medicaid liens, health insurance reimbursement claims and other expenses.

Since 1994, Dallas Personal Injury Attorney, Robert C. Slim, has handled countless cases under these circumstances.  He can make sure that any claims against your settlement are properly prioritized and negotiated so that you can net the best possible result.