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Cap on Insurance Coverage

Mark Cappel
UpdatedMay 5, 2009

Can insurance companies put a cap on settlements in car accidents?

We are being offered a settlement after my husband had a car accident. They are asking for us to make a "demand" in the amount that we want. They say that there is a $500,000. cap on the policy. There are 6 men dividing up this money. My husband will be going through 3 more surgeries in the future-we need to know if the insurance company can go over that $500,000 amount if they need to in order to settle this claim with everyone. Thank you.

I strongly encourage you to consult with an experienced personal injury attorney as soon as possible to discuss the accident, your husband’s injuries, and the medical treatment he requires. An attorney should be able to look at the situation and tell you how to best ensure that your husband is fairly compensated for the injuries caused by this accident. For assistance finding an attorney in your area who can assist you and your husband in pursuing this claim, you can visit the American Bar Association’s attorney referral program at

From my past experience, insurance companies will pay only up to the maximum liability coverage limit stated in an insured individual's policy. Most policies include three different liability limits: a per person injury limit, a per accident injury limit (which would apply if multiple individuals are injured in the same accident, as seems to have happened in your husband’s case), and a limit on the how much it will pay to repair or replace damaged property. For example, a policy may limit coverage to $500,000 for bodily injury per incident, but also set a cap of $200,000 per person, meaning that each injured person could collect a maximum of $200,000, not the total limit of $500,000 per incident.

While the insurance company will likely not pay more than the coverage limits of the policy, if your husband’s medical expenses exceed the coverage amount, you may want to file a lawsuit against the person that was at fault in the accident rather than settling with the insurance company for whatever they are willing to pay you up front. If you file suit and obtain a judgment against the other driver, you should be able to collect up to the coverage limit (or up to the maximum amount of your judgment, if it is less than the coverage cap) from the insurance company. Any portion of the judgment left unpaid by the insurance company would likely be the personal responsibility of the at-fault driver, and you could attempt to collect any remaining amount from him directly. The problem faced by most people in this situation is that the negligent driver rarely has any money or assets which can be used to pay the debt. You will need to take this possibility into consideration when deciding whether it makes most sense to settle with the insurance company now, or to file a lawsuit to try to obtain a larger amount of money. Your attorney should be able to review the facts of the case to help you make the right choice.

I wish your husband the best of luck on his road to recovery.

I hope that the information I have provided helps you Find. Learn. Save.