What Happens When Auto Accident Claims Exceed Policy Limits?

Texas roads are more dangerous than ever, with a reportable car crash occurring every minute, and nearly 24,000 fatalities and serious injuries from car crashes in 2021. In addition, the cost of medical care continues to rise, leading to financial hardship and difficulty when recovering from a car accident or injury.

While Texas requires drivers to carry accident insurance, these policies have settlement limits that often don’t keep pace with rising medical costs. How often do auto accident settlements exceed the policy limits, and what happens when car accident damages exceed the maximum?

Car Accident Policy Limits in Texas

Texas law requires drivers to prove that they can pay for accidents they cause. The minimum required car insurance coverage in Texas is the “30/60/25” liability policy, which pays for $30,000 in injury compensation per person, up to $60,000 in injury protection per accident, and $25,000 in property damages. Because this is the minimum legal requirement, and the most affordable option, most Texas drivers carry this amount of accident coverage. However, there are many more insurance coverage types available, including:

• Additional liability insurance. Liability insurance pays other people when you are at fault in a car accident. While 30/60/25 is the minimum amount of car accident liability insurance required, drivers may purchase additional liability insurance to protect their assets if they cause an accident
• Personal Injury Protection (PIP) insurance. Personal Injury Protection covers medical bills, lost wages, and other costs in the event of a car accident injury, regardless of who is at fault. PIP is not legally required in Texas but is typically included in auto insurance policies. A more limited form of PIP, called Medical Payments Coverage, is available that only pays for medical costs if you or your passengers are injured.
• Uninsured/underinsured motorist insurance. This type of coverage pays medical and car repair bills if you are involved in a hit-and-run accident, or if the accident was caused by an uninsured driver or a driver without enough insurance to cover your damages. In Texas, auto insurance companies must offer you this coverage.
• Collision coverage. Collision coverage pays for the repair of your car after an accident, regardless of who caused the collision. Comprehensive coverage also pays for car repair if your car is damaged in other scenarios, like a flood or theft.

As you can see, liability insurance covers the damages you may cost other people if you cause a car accident, while other forms of insurance cover your accident costs regardless of who is at fault, or cover your damages if the other driver can’t pay.

How Often Do Auto Accident Settlements Exceed the Policy Limits?

Auto accident settlements almost never exceed policy limits, except in extremely rare cases. An insurance company is not required to offer settlement amounts outside the limits of their policy, and will usually fight claims that exceed those limits.

However, it does sometimes happen that an accident victim’s damages exceed the amount covered by insurance, leaving them with unpaid bills and excess costs.

What Happens When Car Accident Damages Exceed Policy Limits?

If you have been injured in a car accident in Texas, you may be entitled to a wide range of damages, including medical bills, lost wages, property damage, pain and suffering, and more. These damages can quickly exceed the other driver’s policy limits, especially if there were multiple people in your vehicle. After an accident you should:

• Review the other driver’s coverage. The other driver may have additional insurance coverage or policies that can help to cover your costs.
• Review your own coverage. You may have PIP or underinsured motorist coverage that helps to protect you.
• Hold the other driver personally liable. If their insurance is insufficient to cover your claims, you can sue the other driver to help recover your damages.
• Hold the insurance company liable. In rare cases, if an insurance company is behaving improperly, it is possible to sue them for operating in bad faith.
• Hold a third party liable. If the other driver was driving for business purposes or operating a company vehicle, or if the accident was caused by a car defect or malfunction, it is possible to sue a third party for damages in an accident.

How Can a Texas Car Accident Attorney Help?

If your car accident claims are near policy limits, it is extremely important to consult with an experienced auto accident lawyer before negotiating a settlement. Car insurance companies will often push for a quick settlement, but signing a settlement agreement waives your right to sue for additional damages in the future. Some car accidents have long-lasting effects, and accepting a settlement offer too soon may cost you in the long run.

There can be many different types of damages in a car accident, and you have many legal options for how to make sure that you recover everything you are entitled to, and that your rights are protected.

It’s crucial to have a legal expert on your side to make sure you make the right decisions, now and in the long term. Aaron Allison is an experienced Texas accident lawyer with the courage to fight for your rights, and free consultations to discuss your case before you accept a settlement. If you’ve been the victim of a car accident, contact us today.