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What Happens When Car Accident Claim Exceeds Insurance Limits

by Carmen PickelDecember 21, 2022
What Happens When Car Accident Claim Exceeds Insurance Limits

Car accidents can be devastating for both the drivers and the passengers involved. Unfortunately, in some cases, the costs associated with the accident can exceed the limits of the insurance coverage. This is why it is important to understand what happens when car accident claim exceeds insurance limits.

Continue reading to learn more about what to do in this situation.

What Is A Car Accident Claim?

A car accident claim is a legal process used to seek compensation for losses resulting from a car accident. It’s a way for car accident victims to seek financial compensation for medical bills, vehicle repairs, lost wages, pain and suffering, and other damages. 

When pursuing a car accident claim, the process begins with filing a claim with the insurance company of the at-fault driver. After the claim is filed, the insurer will investigate the accident, review the evidence, and determine the amount of compensation to be awarded. 

What Are Car Accident Insurance Limits?

What Happens When Car Accident Claim Exceeds Insurance Limits

Car accident insurance limits refer to the maximum amount of money an insurance company will pay for any car accident claim. The limits are set by each individual insurance company and vary from policy to policy. They are typically expressed as a maximum dollar amount, such as $25,000 per person or $50,000 per accident.

Car accident insurance limits are designed to protect the insurer from large financial losses due to a single accident. They are also designed to ensure that the insured party is not left with a large financial burden after a car accident. 

What Happens When Car Accident Claim Exceeds Insurance Limits?

When a driver is involved in an accident, and their damages exceed the limits of their insurance policy, they are responsible for the remaining costs. This means they will have to pay for any damages their insurance policy does not cover, including repairs, medical bills, and other costs associated with the accident.

When car accident claims exceed insurance limits, the first step is to contact the insurance company. The insurance company may be able to provide additional coverage options or may be able to negotiate with the other driver’s insurance company to reach a settlement that covers the remaining costs. If the insurance company cannot provide additional coverage, the driver may need to pursue legal action against the other driver.

In some cases, the driver’s own insurance company may be liable for the remaining costs. This is known as underinsured motorist coverage. Underinsured motorist coverage is designed to protect drivers from losses that exceed the limits of their own insurance policy.

Sometimes, the driver may be able to pursue a third-party claim against the other driver’s insurance company. This involves filing a lawsuit against the other driver’s insurance company to receive compensation for the remaining costs.

Additionally, if the accident occurs in no-fault states, the driver may be able to pursue a claim against their own insurance company. This is known as personal injury protection (PIP) coverage. PIP coverage is designed to cover medical expenses and lost wages for drivers and passengers involved in an accident.

Learn More About Car Insurance With Keep Driving!

No matter what the situation is, drivers need to understand what happens when car accident claims exceed insurance limits. Knowing what to do in this situation can help drivers protect their financial interests and ensure that they are not left with a large bill they cannot pay.

For more valuable auto advice, explore the rest of Keep Driving today!

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