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A policy limits settlement is the maximum amount an insurance company will pay to settle a claim. 

Each insurance policy has specific limits, known as a policy limit, which represent the most an insurer will pay for damages caused by the policyholder in a covered incident. Once these limits are reached, the insurer can no longer provide further compensation under that policy.

With personal injury cases, the amount you can recover from an insurance company is determined by the at-fault party’s insurance policy limit. This agreement means that no matter how severe your injuries or how high your medical expenses may be, the insurer’s responsibility is capped at the maximum coverage amount. 

Understanding how a policy limits settlement works is essential in ensuring you receive the compensation you are entitled to within these restrictions.

Insurance policy limits settlement

Types of Insurance Policy Limits

Understanding the different types of insurance policy limits is critical when negotiating a fair settlement. Three primary types of limits may come into play in personal injury cases:

  1. Per-Person Limits: This limit caps the amount an insurance company will pay for each individual injured in an auto accident. For example, if the per-person limit is $50,000, that is the maximum amount the injured party can receive, regardless of the total damages.
  2. Per-Accident Limits: This type of limit refers to the total amount an insurance company will pay for all physical injuries and damages resulting from a single accident. For example, if the per-accident limit is $100,000 and multiple people are injured, that total is shared among the injured parties.
  3. Aggregate Limits: Some insurance policies include aggregate limits, which represent the maximum injury compensation an insurer will pay over a specified period, usually a year. This limit applies to all claims made within that policy period, which can affect the amount available for your personal injury claim.

Factors Affecting Policy Limits Settlements

Several factors can influence whether a policy limits settlement is appropriate and how much compensation you can expect to receive.

Severity of Injuries and Damages

The severity of your injuries and the extent of property damage are crucial in determining whether a policy limits settlement demand is feasible. In cases of serious injuries, such as traumatic brain injuries or permanent disabilities, the damages may exceed the at-fault party’s policy limits. 

For example, if your medical bills and lost wages add up to $150,000 but the at-fault driver’s maximum coverage amount is only $50,000, you will need to decide whether to accept a policy settlement or explore additional compensation options.

Available Insurance Coverage

The auto insurance coverage the at-fault party carries is a critical factor. If the at-fault party has a low maximum coverage amount, a policy limits settlement may be the best option, but it might not cover the full extent of your damages. 

In such cases, it’s important to work with a lawyer who can help you understand your options and determine if additional compensation is available, such as from your own underinsured motorist coverage.

Comparative Negligence

Comparative negligence laws can also affect the amount of compensation you can recover in a policy limits settlement. If you are found partially at fault for the accident, the settlement amount may be reduced according to your percentage of fault. 

For example, if you are found to be 20% responsible for the accident, your policy limit settlements may be reduced by that same percentage. You could receive less than the full policy limit, even if the insurance company agrees to a policy limit demand.

Potential for Additional Compensation

In some cases, compensation beyond the maximum policy limits may be available. For instance, if your damages exceed the applicable insurance policy limits, you may be able to pursue a claim under your own underinsured motorist coverage. Additionally, if more than one party is responsible for the accident, you could file claims against each liable party. 

A lawyer can help you explore all options to maximize your compensation in a personal injury case.

The Role of a Personal Injury Lawyer

Securing a policy limits settlement can be complex, especially when dealing with an insurance company focused on minimizing payouts. A personal injury lawyer ensures you receive fair compensation and your liability claim is handled properly.

Evaluating the Case

A lawyer will carefully evaluate your personal injury case to determine whether a policy limits settlement is appropriate. This evaluation includes assessing the severity of your injuries, the available insurance’s maximum coverage amount, and whether additional compensation may be pursued from other sources. 

If your damages significantly exceed the amount stipulated in the policy limit, your lawyer may advise against accepting the maximum coverage amount in favor of pursuing a larger settlement through other means.

Negotiating with the Insurance Company

One of the most critical roles a lawyer plays is negotiating with the insurance company on your behalf. They will draft a policy limit demand letter, formally requesting that the insurer pay the full policy limit. 

This letter typically outlines the facts of the case, the extent of your injuries, and the associated costs, such as medical bills and lost wages. A strong policy limit demand letter increases the likelihood of the insurance company offering a full settlement.

During negotiations, the insurance company may attempt to offer less than the maximum coverage amount. A skilled lawyer will push back against such offers, advocating for your best interests and ensuring you receive the maximum possible compensation under the policy.

Exploring Other Options

If your damages exceed the insurance limits, an experienced personal injury attorney can help you explore other options for compensation. This process could involve filing claims against multiple responsible parties, pursuing underinsured motorist coverage, or even taking the case to court if necessary. 

Having a lawyer ensures you don’t miss any opportunities for full compensation in your personal injury case.

Steps Involved in a Policy Limits Settlement

Securing a policy limits settlement involves several important steps, all of which require careful attention to detail to ensure your claim is handled properly and you receive the maximum compensation available.

Demand Letter

The first step in pursuing auto accident settlements is sending a policy limits demand letter to the insurance company. The letter outlines the nature of the accident, the injuries sustained, and the total costs of the damages. It also includes a formal policy limit demand, requesting that the insurance company pay the maximum coverage amount to resolve the claim.

A well-drafted policy limits demand letter is crucial for setting the stage for negotiations. It provides a clear, factual basis for your claim and communicates that you are seeking the full amount available under the policy.

Negotiation and Agreement

The negotiation process begins once the policy limit demand letter has been submitted. The insurance company may initially offer less than the full policy limits, especially if they believe your claim can be settled for a lower amount. However, a skilled lawyer will negotiate on your behalf, using the evidence gathered to support the policy limit demand.

If negotiations are successful and the insurance company agrees to pay the maximum coverage amount, both parties must finalize the agreement. This step typically involves reviewing and signing legal documents that release the insurance company and the at-fault party from further liability in exchange for the settlement payment.

Release and Settlement Documents

After both parties agree to the policy limits settlement, the final step is signing the release and settlement documents. These documents confirm that you agree to the payment and that no further legal action will be taken against the insurance company or the at-fault party. 

Once the documents are signed, the insurance company will issue the compensation amount, and the case will be considered resolved.

Secure Maximum Compensation With Rosenfeld Injury Lawyers

Securing a policy limits settlement, especially when recovering from an injury, can be complex and often frustrating. Having a skilled lawyer by your side who is experienced in personal injury accidents and policy limits settlement cases can make all the difference in ensuring you receive the compensation you deserve.

At Rosenfeld Injury Lawyers, we are committed to helping accident victims navigate the legal process and maximize their compensation. Our Chicago-based personal injury law firm has extensive experience negotiating with insurance companies, evaluating cases, and exploring all possible settlement avenues. 

If you believe a policy limits settlement is an option in your case, or if you are facing challenges with your insurer, contact us for a free consultation. Call (888) 424-5757 or fill out our contact form.



Client Reviews

Jonathan Rosenfeld was professionally objective, timely, and knowledgeable. Also, his advice was extremely effective regarding my case. In addition, Jonathan was understanding and patient pertaining to any of my questions or concerns. I was very happy with the end result and I highly recommend Jonathan Rosenfeld.

– Michonne Proulx

Extremely impressed with this law firm. They took control of a bad motorcycle crash that left my uncle seriously injured. Without any guarantee of a financial recovery, they went out and hired accident investigators and engineers to help prove how the accident happened. I am grateful that they worked on a contingency fee basis as there was no way we could have paid for these services on our own.

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This lawyer really helped me get compensation for my motorcycle accident case. I know there is no way that I could have gotten anywhere near the amount that Mr. Rosenfeld was able to get to settle my case. Thank you.

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Jonathan did a great job helping my family navigate through a lengthy lawsuit involving my grandmother’s death in a nursing home. Through every step of the case, Jonathan kept my family informed of the progression of the case. Although our case eventually settled at a mediation, I really was impressed at how well prepared Jonathan was to take the case to trial.

– Lisa

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