How Often Do Auto Accident Settlements Exceed the Policy Limits

July 16, 2024

How Often Do Auto Accident Settlements Exceed the Policy Limits?

Table of Contents

Auto accident settlements are financial agreements reached between the injured party and the at-fault driver’s insurance company.

These settlements cover medical expenses, property damage, and other losses. However, in some cases, the settlement amount may exceed the policy limits set by the insurance.

Understanding when and why this happens can help you be better prepared in the event of a serious accident.

Average Auto Accident Settlement Amounts in the US

Statistic Value
Average Settlements (2020) $20,000 to $25,000
Average Injury Settlement $20,235
Average Property Damage Settlement $4,711
Martindale-Nolo Survey Average Settlement $23,900
Majority of Respondents Less than $10,000
Typical Settlement Duration 10.7 months
Majority of Claims Settled Within Six months
Settlement Route 98% settled out of court

Understanding Policy Limits in Auto Accident Settlements

When discussing auto accident settlements, it’s crucial to grasp the concept of policy limits. These limits are the maximum amounts an insurance company will pay for a claim. Knowing your policy limits helps you understand what to expect in a settlement.

Definition of Policy Limits

Policy limits are the caps on the amount of money an insurance company will pay for damages in an accident. These limits are outlined in your insurance policy. They typically include bodily injury limits per person, per accident, and property damage limits.

For example, a policy might have a bodily injury limit of $50,000 per person and $100,000 per accident, with a property damage limit of $25,000. These figures represent the maximum the insurance will pay.

Components of an Auto Accident Settlement

Understanding the various components of an auto accident settlement is crucial for ensuring that you receive fair compensation. Settlements typically cover a range of expenses and losses resulting from the accident.

Below are the primary components that are often included.

Understanding these components helps you to better estimate a fair settlement amount. Ensuring all these areas are covered is essential for achieving full compensation for your losses.

Factors Influencing Settlement Amounts

Several factors influence the amount of an auto accident settlement, from the severity of injuries to insurance company practices. Understanding these can help you prepare for what to expect in a settlement.

Severity of Injuries and Damages

The severity of injuries and damages plays a crucial role in determining settlement amounts.

Severe injuries requiring extensive treatment lead to higher settlements. For instance, a broken leg might result in a $50,000 settlement, while a traumatic brain injury could lead to $500,000 or more.

Property damage, such as a total vehicle loss, is also considered. Injuries impacting your ability to work or daily activities increase settlement amounts.

Insurance Company Practices

Insurance companies aim to minimize payouts, often offering lower initial settlements. They might delay processing claims or dispute damages and injuries.

Understanding these tactics can help you prepare better. Thorough documentation of injuries and expenses is vital. Having legal assistance can significantly improve negotiation outcomes.

Medical Expenses and Documentation

Medical expenses are a significant part of an auto accident settlement. This includes emergency room visits, surgeries, hospital stays, and medications.

Providing detailed and accurate medical records is essential. These records should show the costs and necessity of treatments.

Comprehensive documentation strengthens your case for a higher settlement.

Lost Wages and Future Earning Potential

If your injuries prevent you from working, you can claim lost wages. This includes both current and future income loss.

Providing proof of income before the accident is necessary. Statements from your employer can demonstrate the impact of injuries on your ability to work.

Future earning potential is crucial for long-term financial stability.

Pain and Suffering

Pain and suffering include physical pain and emotional distress. These are more subjective and vary widely.

Courts consider factors like the severity and duration of pain and the impact on daily life. Quantifying pain and suffering can involve multipliers based on medical expenses.

Personal accounts and medical records help substantiate these claims.

How Often Do Settlements Exceed Policy Limits?

Settlements exceeding policy limits can happen, though they are relatively uncommon. Understanding when and why this occurs can provide valuable insight for those involved in serious auto accidents.

Influence of Severe Accidents

Severe accidents often lead to settlements that exceed policy limits.

When injuries are catastrophic, such as spinal cord injuries or traumatic brain injuries, medical expenses alone can surpass the limits.

For instance, a single surgery might cost $150,000, far exceeding a $100,000 policy limit.

Additionally, long-term care and rehabilitation costs add to the total expenses. Such cases necessitate looking for additional compensation beyond the policy limits.

Role of Multiple Policies and Defendants

In situations where settlements exceed policy limits, multiple policies or defendants may come into play.

For example, if multiple vehicles are involved in an accident, each at-fault party’s insurance can contribute to the settlement. This aggregation of policies helps cover the extensive costs associated with severe injuries.

Additionally, umbrella insurance policies provide extra coverage beyond standard policy limits. This strategy ensures that victims receive the necessary compensation despite high medical bills and other expenses.

Impact of Punitive Damages

Punitive damages can also lead to settlements exceeding policy limits. These are awarded in cases where the at-fault party’s actions were particularly reckless or intentional.

For instance, if a drunk driver causes a severe accident, the court might award punitive damages to punish the driver and deter similar behavior in the future.

These damages are often substantial and can significantly increase the total settlement amount, pushing it beyond the policy limits.

Frequency Comparison Across Different States

The frequency of settlements exceeding policy limits can vary by state.

States with lower minimum insurance requirements might see more cases where settlements surpass policy limits.

For example, in California, the minimum liability insurance is relatively low, leading to higher chances of settlements exceeding these limits.

Conversely, states with higher minimum requirements might have fewer such cases.

Understanding these state-specific trends can help in assessing the likelihood of exceeding policy limits in a given jurisdiction.

Options When Settlements Exceed Policy Limits

When auto accident settlements exceed policy limits, victims need to explore additional options to cover their expenses. Understanding these options can help ensure that you receive adequate compensation for your injuries and damages.

Pursuing Additional Compensation

If the settlement exceeds the at-fault driver’s policy limits, pursuing their personal assets can provide additional compensation. This might include real estate, savings, or other valuable property.

Utilizing umbrella insurance policies is another option, as these provide extra coverage beyond standard auto insurance limits.

This can be particularly useful in severe injury cases. However, these approaches often involve legal action and can be time-consuming.

Filing Lawsuits for Excess Damages

When settlements exceed policy limits, filing a lawsuit for excess damages can be a necessary step. This legal process involves seeking additional compensation from the at-fault driver beyond what their insurance covers. Here is the typical process:

  1. Determine the total amount of damages and compare it with the policy limits of the at-fault driver.
  2. Seek legal advice to understand the feasibility of filing a lawsuit and the potential outcomes.
  3. Your attorney will file a legal complaint against the at-fault driver in court.
  4. Collect all necessary documentation, such as medical records, proof of lost wages, and other relevant evidence.
  5. The case will be presented in court, where a judge or jury will determine if additional compensation is warranted.

Filing a lawsuit for excess damages can be complex and time-consuming. However, it is often necessary to ensure you receive adequate compensation for severe injuries and significant financial losses.

Consulting with a knowledgeable attorney can greatly improve your chances of success.

Exploring Structured Settlements

Structured settlements provide periodic payments instead of a lump sum. This method can offer a steady income stream to cover ongoing medical expenses and other costs. It is beneficial for those with long-term care needs.

Claiming against other liable parties is another strategy. If multiple parties are at fault, each insurance policy can contribute to the settlement.

Impact of Bankruptcy on Settlement Recovery

Bankruptcy can impact your ability to recover settlements exceeding policy limits.

If the at-fault driver files for bankruptcy, it may shield their personal assets from being used to pay excess damages. This complicates the recovery process and might limit the compensation you receive.

Legal assistance can help understand the complexities of bankruptcy law.

Secure the Compensation You Deserve

If you need assistance with your auto accident settlement, reach out to Callender Bowlin, your trusted Denver truck accident attorney.

Call us at (719) 350-4872 for a consultation and let us help you secure the compensation you deserve.