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How Often Do Car Accident Settlements Exceed The Policy Limits in Pennsylvania?

If you sustained an injury from a traffic collision, you are entitled to compensation for damages including medical bills, lost wages, car repairs, and pain and suffering. Unfortunately, sometimes the amount that insurance covers do not account for all of the damages. Although it is possible in rare cases to collect compensation beyond the insurance policy limits, it is neither easy nor common. In order to understand how often car accident settlements exceed policy limits in Pennsylvania, you must first understand what a policy limit is and the laws surrounding them.

What is a policy limit and how does it work?

When you purchase liability insurance, there is a policy limit that determines the maximum amount of money that your insurance will cover for damages. In Pennsylvania, the law requires that you purchase a minimum of $15,000 per injured person, $30,000 per accident, and $5,000 per property damage protection. These are minimum amounts, meaning that you may purchase insurance that has policy limits above the aforementioned amounts.

Bodily injury coverage has two limits—the amount per injured person and the amount per accident. This means if someone has 20/40 coverage, then insurance is not legally obligated to pay more than $20,000 per injured person and no more than $40,000 per accident, even if your personal injury claim exceeds this amount. Property damage has a separate limit under auto insurance policies. Suppose you sustain an injury that amounts to $20,000 in bodily injury and $10,000 in damage to your vehicle, and the other driver has 20/40 bodily injury coverage and $5000 property damage limit. In this case, the insurance will pay the full $20,000 for bodily injury but will only pay $5,000 for property damage because it is a separate limit, even though the total amount would still be under the maximum amount of $40,000.

If you have your own policy of underinsured motorist coverage, then you can collect an additional payout for bodily injury under that policy. Unfortunately, it is often the case that few victims receive more than the policy limits from the at-fault driver’s insurance policy, even if you are awarded more than the policy limit by a judge or jury. Although it is rare, there are four few routes you can take to collect more than the policy limit.

Filing a Claim against Additional Defendants

Depending on the circumstances of the accident, you may be able to file a lawsuit against more than one defendant, which would allow you to collect from multiple insurance policies, thus increasing your chances of receiving more compensation for your injuries. You will only be able to file a lawsuit against more than one defendant if more than one person or company can be held legally liable for the collision. If a driver is driving on behalf of a company, you can sue both the driver and the employer under the legal doctrine of respondeat superior. For example, if you collide with a delivery truck, it may be possible to sue both the driver and the trucking company. Additionally, if there was an accident involving two or more parties, you can file a claim against each party, and you will receive compensation from each of their policies proportionate to the degree they are responsible. Finally, in some instances you may be able to prove that a business engaged in a joint venture can be liable for the accident, thus allowing you to receive compensation from each party involved.

Collecting Under the Umbrella Policy

If the defendant responsible for the accident has an umbrella policy, you may be able to collect compensation beyond the limits of their primary auto insurance. Umbrella policies provide additional coverage after other policies have paid their maximum policy limit. It is more common for people to have umbrella policies if they have assets they want to protect. Typically, corporate companies, trucking companies and wealthier individuals are more likely to have umbrella policies. It is imperative to find out what kind of policies the defendant has to ensure you receive maximum compensation.

Collecting from the Defendant

It is likely that there won’t be more than one defendant to file a claim against, or an umbrella policy to collect additional money from. If your injuries and damages exceed the policy limit, another option is attempting to collect from the defendant directly. A seasoned personal injury lawyer can assist in finding assets from the defendant to collect and recover. Such assets can include real property, cash, shares of stock, or vehicles. However, it is very likely that there won’t be assets of value available to recover.

Recovering under the Unfair Insurances Practice Act

The last resort that could potentially result in a settlement that would exceed policy limits is if the insurance company acted negligently towards the at-fault driver. Many states, including Pennsylvania, require that insurance companies to make reasonable and prompt efforts to settle claims. In Pennsylvania Supreme Court case Cowden v. Aetna. Cas. & Curety Co., the court ruled that “it is not the right of the insurer to hazard the insured’s financial well-being.” Thus, if the insurance company does not act in good faith, and thus fails to protect their policyholders from financial loss due to excess judgments, then they may be responsible for the excess judgment.

For example, there was a case in which Patrick Hennessey was a passenger in a car when the driver, Caruso, rear-ended another car. After the initial accident, another driver, Robinson, hit another car, which then sandwiched Hennessey in between that car and Caruso’s car. Hennessey suffered an above the knee amputation and filed a suit against both drivers. Caruso was insured under Allstate, and Allstate rejected the settlement of $250,000 that fell within policy limits. Despite multiple attempts from Hennessey’s lawyers to get Allstate to resolve the settlement, they failed to do so. After trial, the jury determined a $19.1 million verdict for Hennessey, to which Caruso is 45% responsible. Thus, Caruso would have to pay for 8.5 million, falling far above policy limits. In this case, Allstate put Caruso in a financially devastating situation, as he would be responsible for the excess amount, leaving it open to file suit against Allstate.

How Often Do Settlements Exceed Policy Limits?

Despite the several routes you can take to recover additional compensation beyond policy limits, it is still incredibly rare for settlements to successfully achieve this. In a majority of cases, there is not more than one party responsible for the accident, and they will not have umbrella policies. Additionally, it is extremely hard to prove that the insurance company acted negligently, and suing the insurance company on the basis of bad faith is rare. A 2018 report states that the average bodily injury claim awarded was almost $16,000 while the average property damage claim awarded was almost $3,500. Since the minimum amount of bodily injury insurance in Pennsylvania is $15,000 and the minimum amount of property damage insurance is $5,000, the averages do not fall far above or even above the minimum amounts.

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