Managing insurance policies for your home, car, and life is difficult enough already. It’s easy to get lost in the sea of options, sales pitches, and fine print. But after a car crash, it suddenly becomes much more important for you to understand your insurance policy, and what your policy limits mean.
Here are the basics of the policy limits on your own insurance from the Belleville car accident lawyers at Hipskind & McAninch, LLC. If you have any questions about your policy, feel free to pick up the phone and give us a call at (618) 641-9189 today.
What Are Policy Limits?
First things first, what are insurance policy limits? A policy limit is the maximum benefit an insurance company will pay a policyholder if/when an insured event occurs. This means that regardless of the severity of an injury, the insurance company is only required by the policy to pay out the maximum of the policy limit amount.
For example, someone who survives a rollover accident on Highway Forty may be facing $200,000 of hospital bills. However, that same person has purchased an insurance policy with a policy limit of $50,000. Theoretically, his own insurance company is only required to pay $50,000, regardless of the $200,000 hospital bill, because that was the previously agreed-upon limit.
Illinois Car Insurance Requirements
When it comes to auto insurance, Illinois has a state mandatory insurance law on the books. Illinois drivers are required to have minimum coverage of:
- $25,000 for the injury or death of one person in an accident.
- $50,000 total for all injuries or deaths in an accident.
- $20,000 for damage to the property of another person in an accident.
These numbers provide a baseline for what you could expect to be the minimum coverage of other drivers on the road, assuming they are following the law and have insurance (CyberDriveIllinois). If this amount sounds a bit low, that’s probably because it is after a traumatic accident with multiple injuries.
Are Policy Limits Set in Stone?
Insurance companies put policy limits in place for good reason. The limits protect them financially, practically guaranteeing that they will only have to pay up to the set maximum amount, regardless of the severity of the accident. In most cases, there are not many ways for policyholders to get around this rule, because they chose and agreed to the policy.
One exception to this rule occurs when the insurance company acts in bad faith. Insurance bad faith happens when the victim should be able to recover damages and is willing to settle within the policy limit, but the insurance company finds reasons to delay or deny legitimate claims, or to offer insultingly low amounts. If an insurance company is found to have acted in bad faith, the victim can take the company to court, and a jury can hold the company liable for the full amount of damages, above and beyond the policy limit.
Your Options When Your Damages Exceed the Policy Limit
When your damages exceed your policy limit and your insurance company has not acted in bad faith, you may feel like your outlook is bleak. You still have a few options for collecting additional compensation, however.
- Using umbrella policies. Umbrella insurance policies are designed as a backup for when damages exceed a standard liability insurance limit. Using the same example as above, the at-fault driver’s insurance policy limit caps out at $50,000. If that person has a $25,000 umbrella policy, however, the policy would kick in and pay $25,000 more toward the $200,000 total in hospital bills. This would leave the victim with $75,000 in compensation, rather than the original $50,000. Umbrella policies are more common among large businesses, but some private individuals have them, too. An experienced attorney can research the defendant’s insurance to make sure that all applicable policies are being evaluated and used.
- Seeking damages from an additional party. Unfortunately, in many cases, the root of an accident comes down to the carelessness of a single person. But sometimes, additional parties are also partially liable. For example, if the combination of a car driver’s negligence and a faulty part caused an accident, the victim could request compensation from both the at-fault driver and the auto manufacturer, leading to more compensation. Or, if the at-fault driver was on the job at the time of the crash, the victim may be able to receive damages from the auto manufacturer, the driver, and the driver’s place of employment.
- Collecting from the defendant directly. When the defendant’s insurance policy limit isn’t enough to cover the victim’s costs, the victim may be able to receive compensation directly from the defendant, in addition to money from the defendant’s insurance company. This is only effective, however, when the defendant has substantial money or assets with which to pay the damages.
Overall, navigating the legal process along with insurance company rules and regulations can be a tricky business. The founding partners of Hipskind & McAninch, LLC, worked for preeminent law firms in defense of insurance companies for over 10 years before switching to exclusive representation of personal injury victims. Insurance policy limits may be a roadblock, but our knowledgeable legal team will explore every avenue to get you the compensation you deserve.
Our clients love us, and we think you will, too. If we take your case, we take no fee until we get you fair compensation, and that’s our no-fee guarantee. If we don’t take your case, we’ll either give you all the information you need to handle it alone, or refer you to another good lawyer we know who will take care of you.
It doesn’t matter what your legal question is. We have an answer. For a free, no-time-limits consultation, please give us a call at (618) 641-9189.