What Happens When a Car Accident Claim Exceeds Insurance Policy Limits?

A single serious car accident can generate medical bills, lost income, and pain and suffering worth far more than the at-fault driver’s insurance can ever pay. When that happens, injury victims are often left wondering who covers the difference, and whether the at-fault driver’s low policy limit means their case is effectively capped. It does not, but getting past that limit takes knowing where to look.

At RTRLAW, our attorneys have handled car accident claims across Florida, Texas, Massachusetts, and Michigan since 1988. For almost four decades, our accident attorneys have guided clients through exactly this type of situation; when the responsible driver simply did not carry enough insurance to cover what happened, and what a policy limit actually is, what happens once your damages exceed it, and the tools available under each state’s law to recover the rest.

What Are Insurance Policy Limits?

A liability policy limit is the maximum amount an insurance company will pay on behalf of its insured for a covered claim. Most auto policies list two bodily injury numbers, a per-person limit and a per-accident limit, plus a separate property damage limit. If your damages are $500,000 but the at-fault driver only carries a $30,000 per-person limit, the insurance company’s obligation stops at $30,000, no matter how strong your case is.

That gap between what you are owed and what one policy will pay is where these cases become complicated, and where most of the actual legal work happens.

Florida’s Minimum Insurance Requirements Create a Real Gap

Florida is one of the few states that does not require drivers to carry bodily injury liability insurance at all. To register and legally operate a vehicle, Florida only requires $10,000 in Personal Injury Protection and $10,000 in property damage liability coverage.

In practice, that means a driver can cause a serious, life-altering auto injury in Florida while carrying no bodily injury coverage whatsoever. Some drivers do carry optional bodily injury liability, and many carry more than the bare minimum, but plenty do not, which is exactly why Florida claims run into policy limit problems more often than in most other states. 

Texas’s Minimum Insurance Requirements

Texas takes a different approach. Under Texas Transportation Code Section 601.072, every driver must carry liability coverage in what is commonly called the 30/60/25 minimum. 

 A $60,000 total cap sounds like more protection than Florida’s zero requirement, but it still falls far short of what a serious injury, a spinal injury, a traumatic brain injury, or a wrongful death claim, typically costs. When more than one person is hurt in the same car crash, that $60,000 has to stretch across everyone, which can shrink each individual’s share considerably.

When Multiple People Are Hurt in the Same Crash in Texas

Texas’s per-accident cap creates a problem that does not exist under a pure per-person limit. If a crash injures four people and the at-fault driver carries the 30/60/25 minimum, the entire injured group has to share $60,000, not $30,000 each. Insurance companies sometimes resolve this by paying claims on a first-come, first-served basis, which can leave later-settling victims with little or nothing from that policy even though their injuries were just as real.

When more than one person is hurt in the same crash, coordinating who settles when, and in what order, can materially change how much of a limited policy each person actually receives. This is one of several reasons multi-victim crashes benefit from early legal involvement rather than each injured person negotiating separately and independently with the same insurer.

Massachusetts’s Minimum Insurance Requirements

For auto accident victims injured in Massachusetts, the compulsory insurance rules changed recently and produce a different kind of gap than Florida’s or Texas’s. Under Massachusetts General Laws Chapter 90, Section 34A and Section 34O, drivers must carry bodily injury liability coverage of at least $25,000 per person and $50,000 per accident, along with $30,000 in property damage liability, for any policy issued or renewed on or after July 1, 2025. Massachusetts also requires $8,000 in Personal Injury Protection coverage, which pays your medical bills and lost wages up front regardless of fault.

A $25,000 per-person minimum still falls well short of the cost of a serious injury, a fracture requiring surgery, or a traumatic brain injury, so the same policy limit problem described throughout this guide applies in Massachusetts. Because Massachusetts requires Personal Injury Protection, a claimant generally has to show that reasonable medical expenses exceed $2,000, or that the injury involves death, permanent disfigurement, or a similar qualifying loss, before pursuing the at-fault driver’s liability policy for pain and suffering under Massachusetts General Laws Chapter 231, Section 6D. Once that threshold is met, everything else in this guide, including underinsured motorist coverage and umbrella policies, works the same way it does in Florida and Texas.

Michigan’s No-Fault System Changes How Policy Limits Work

Michigan’s system is structured differently enough that it deserves its own explanation. Michigan requires drivers to carry bodily injury liability coverage of at least $250,000 per person and $500,000 per accident, along with $10,000 in property damage liability, under MCL 500.3009, following the state’s 2020 no-fault reform. Some drivers qualify for a lower $50,000/$100,000 tier, so it is worth confirming which limit actually applies to the driver who hit you.

Michigan also lets drivers choose their own Personal Injury Protection medical coverage limit under MCL 500.3107c, from $50,000 for qualifying Medicaid enrollees up to $250,000, $500,000, or unlimited coverage. Your PIP coverage, whatever tier you or your household selected, pays your own medical bills and a share of lost wages regardless of who caused the crash. It is a completely separate pool of money from the at-fault driver’s bodily injury liability policy described above.

The two systems only connect once you clear Michigan’s tort threshold. Under MCL 500.3135, you can pursue the at-fault driver’s liability policy for pain and suffering only if your injuries involve death, serious impairment of a body function, or permanent serious disfigurement. If your damages exceed the at-fault driver’s available liability limit after that threshold is met, the recovery tools described later in this guide still apply, but Michigan does not require every driver to carry underinsured motorist coverage the way Massachusetts does, so it is worth confirming what your own policy actually includes before you need it. Our Michigan car accident attorneys walk every client through both tracks from the first call.

What Happens When Your Damages Exceed the At-Fault Driver’s Policy?

Once it is clear that a claim will exceed the available liability coverage, the case shifts from simply proving fault to identifying every additional source of recovery available. There are usually several to check.

Your Own Underinsured Motorist Coverage

Underinsured motorist (UIM) coverage is often the fastest path to additional compensation, because it is coverage you already pay for on your own policy. In Florida, Florida Statute 627.727 requires insurers to automatically include UM/UIM coverage on every policy unless the policyholder rejects it in writing. Texas follows a similar offer-and-reject structure under Texas Insurance Code Section 1952.101. If you never signed a rejection form, there is a good chance you have this coverage even if you do not remember buying it.

For more on how this coverage works day to day, see our guide on uninsured motorist coverage in Florida. If you are not sure what coverage you are carrying, our overview on how to find out what kind of car insurance you have walks through where to look.

Florida also allows policyholders to purchase stacked UM coverage, which multiplies your available UM benefits by the number of vehicles insured on your policy, rather than capping you at a single vehicle’s limit. Stacked coverage costs more, but it can make a meaningful difference precisely in the scenario this article addresses, when the at-fault driver’s insurance runs out.

For example, an injury victim with $100,000 in UM coverage on each of three insured vehicles could access up to $300,000 in stacked UM benefits after exhausting the at-fault driver’s policy. Under a non-stacked policy, that same driver would be limited to $100,000 in UM benefits regardless of how many vehicles were on the policy. The difference in a catastrophic injury case can be substantial, which is why it is worth confirming which type of UM coverage you actually carry rather than assuming.

Massachusetts requires drivers to carry uninsured motorist coverage that mirrors the state’s compulsory bodily injury limits, and insurers must also make underinsured motorist coverage available at the policyholder’s election, under Massachusetts General Laws Chapter 175, Section 113L, so most Massachusetts claimants have at least some UM protection built in, and can add UIM by request. Michigan takes the opposite approach: no Michigan statute requires insurers to offer or include UM/UIM coverage at all, so a Michigan driver may have none unless they specifically purchased it. If you were hurt in Michigan, confirming whether your policy includes UM/UIM coverage, and at what limit, is one of the first things our attorneys check.

Other Liable Parties and Additional Insurance Policies

The at-fault driver’s personal auto policy is rarely the only potential source of recovery. Depending on the facts of the crash, other parties or policies may also be responsible:

• An employer, if the at-fault driver was working or driving a company vehicle at the time
• A rideshare or delivery company’s commercial policy, if the driver was logged into the app
• A vehicle owner, if someone other than the owner was driving with permission
• A bar or restaurant, under dram shop liability, if it over-served a visibly intoxicated driver
• A government entity, if a road defect or negligent maintenance contributed to the crash
• A vehicle manufacturer, if a defect such as a brake or tire failure contributed to the collision

Each of these potential sources comes with its own insurance policy, and sometimes its own separate policy limits, which means identifying every party involved in a crash can meaningfully increase the total coverage available.

Consider a delivery driver who runs a red light while logged into a delivery app and causes a serious crash. That driver’s personal auto policy might carry only the state minimum, but the delivery company’s commercial insurance policy, which typically applies while a driver is actively working, can carry limits in the hundreds of thousands or even millions of dollars. Identifying that the driver was on the clock at the time of the crash can be the single most important fact in the entire case, which is why a thorough investigation into what the at-fault driver was doing, and for whom, happens early in any claim that looks like it may exceed a personal policy limit.

How Insurance Adjusters Handle Claims Near Policy Limits

When an insurance company recognizes that a claim is likely to exceed its insured’s policy limit, it often responds in one of two ways. Some insurers tender the full policy limit quickly, essentially acknowledging that the claim is worth at least that much and hoping to close the file before further investigation increases the exposure. Others slow-walk the claim, dispute the extent of the injuries, or make a lowball offer well below the limit, betting that a claimant will accept less rather than pursue other avenues.

Neither response should be accepted at face value without independently confirming the full value of your claim and every source of coverage available. A fast policy-limits tender can look generous, but signing a release in exchange for it can cut off options, such as a bad faith claim, that only exist if the settlement process is handled correctly and in the right order.

Umbrella and Excess Liability Policies

Some drivers, particularly those with significant assets, carry a personal umbrella policy that adds an extra layer of liability coverage on top of their standard auto policy, often in increments of $1 million or more. An umbrella policy on the at-fault driver’s side can be the difference between a claim that settles for policy limits and one that fully compensates an injury victim. Umbrella coverage is not always obvious from the outside, which is one of many reasons a thorough investigation into the at-fault driver’s full insurance picture matters.

Pursuing the At-Fault Driver Personally

When insurance coverage, including UM/UIM and any umbrella policies, still does not cover the full value of a claim, it is legally possible to pursue the at-fault driver’s personal assets through a lawsuit and, eventually, a judgment. In practice, this route is often limited by what the driver actually owns. A judgment against someone with no meaningful assets or income can be difficult to collect, which is why attorneys typically exhaust every insurance-based option first and treat a personal judgment as a last resort rather than a primary strategy.

When the Insurance Company Itself Can Become Liable

One of the least understood parts of this entire process is that, under the right circumstances, the insurance company can end up owing more than its own policy limit.

In Florida, insurers owe their policyholders a duty of good faith. Florida Statute 624.155 creates a statutory civil remedy against an insurer that fails to attempt in good faith to settle a claim when it reasonably could and should have. Before suing under this statute, a claimant generally must file a Civil Remedy Notice and give the insurer 60 days to cure the violation. Florida courts have also recognized this duty at common law. In Berges v. Infinity Insurance Co., 896 So. 2d 665 (Fla. 2004), the Florida Supreme Court held that an insurer has a fiduciary-like obligation to warn its insured of the possibility of an excess judgment and to advise on steps to avoid one. When an insurer breaches that duty by refusing a reasonable settlement offer within policy limits, it can become liable for the entire judgment against its insured, not just the original policy limit.

Texas recognizes a similar, and even more well known, version of this rule called the Stowers doctrine, from G.A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929). Under Stowers, if a claimant makes a settlement demand within policy limits that an ordinarily prudent insurer would accept, and the insurer rejects it, the insurer can be held liable for the full amount of a later judgment even if that judgment exceeds the policy limit.

These doctrines exist because an insurance company controlling the defense of a claim has a real conflict of interest. It benefits financially by paying as little as possible, even when doing so exposes its own policyholder to a judgment far larger than the policy would have covered. Both Florida and Texas law push back against that incentive.

A typical scenario looks like this. An injured claimant, through an attorney, sends the insurer a written demand to settle for the full $30,000 policy limit, along with medical records showing damages clearly exceeding that amount, and gives the insurer a reasonable deadline to respond. If the insurer ignores the demand, misses the deadline, or offers far less without justification, and the case later goes to trial and results in a $250,000 verdict, the insurer may end up owing the full $250,000 itself, not just the $30,000 it originally offered to protect. This is precisely the outcome the Stowers doctrine and Florida’s bad faith framework are designed to produce when an insurer refuses a reasonable opportunity to settle within limits.

Massachusetts approaches this problem differently. Under Massachusetts General Laws Chapter 176D, Section 3(9), an insurer that misrepresents policy provisions, fails to acknowledge or investigate a claim promptly, or refuses to settle promptly once liability has become reasonably clear commits an unfair claims settlement practice. A Massachusetts claimant can send the insurer a written demand for relief under Massachusetts General Laws Chapter 93A, Section 9, describing the unfair practice and the injury it caused. If the insurer does not make a reasonable settlement offer within 30 days and a court later finds the violation was willful or knowing, the claimant can recover multiple damages, up to three times the actual harm, along with attorney’s fees.

Michigan does not recognize the same kind of first-party bad faith claim for an isolated dispute over your own Personal Injury Protection benefits. It does, however, recognize a third-party doctrine similar to Stowers. In Commercial Union Insurance Co. v. Liberty Mutual Insurance Co., 426 Mich. 127 (1986), the Michigan Supreme Court held that a liability insurer that unreasonably refuses to settle a claim within its insured’s policy limits can be held responsible for the full amount of a judgment that later exceeds those limits. Separately, if an insurer is late paying no-fault PIP benefits, MCL 500.3142 requires 12 percent simple interest on the overdue amount, calculated from 30 days after the insurer receives reasonable proof of the claim.

Comparative Negligence Still Affects the Total Recovery

Every source of recovery described above still has to account for fault. Florida, Texas, and Massachusetts all apply a modified comparative negligence rule with a 50 percent bar, meaning a claimant who is found more than 50 percent responsible for their own injuries cannot recover at all, and a claimant found 50 percent or less has their damages reduced by their own percentage of fault.

Michigan applies a similar 50 percent threshold under MCL 600.2959, but the consequence is different. Exceeding the threshold eliminates only your noneconomic damages, such as pain and suffering, while your economic damages, including medical bills and lost wages, remain recoverable after being reduced by your percentage of fault. When multiple insurance policies and multiple defendants are involved, insurers frequently argue over how fault should be divided between them, which is one more reason these claims benefit from experienced representation rather than being negotiated policy by policy on your own.

Protecting Yourself Before an Accident Ever Happens

The best time to protect yourself from an underinsured driver is before you’re ever involved in an accident. Taking a few proactive steps when purchasing or reviewing your insurance policy can significantly improve your financial protection if a serious crash occurs.

To better protect yourself, consider:

• Carry UM/UIM coverage, and consider stacked coverage in Florida if you insure more than one vehicle
• Purchase bodily injury liability coverage well above the state minimum, since it also often increases your own UM/UIM limits
• Consider a personal umbrella policy if you own a home, have savings, or otherwise have assets worth protecting
• Review your coverage every year or two, since minimum limits rarely keep pace with actual medical costs

Although no one expects to be involved in a serious accident, having the right insurance coverage in place can make a tremendous difference when another driver doesn’t carry enough protection. Spending time reviewing your policy today may help prevent significant financial hardship in the future.

What to Do If Your Damages Exceed the At-Fault Driver’s Coverage

Discovering that the at-fault driver’s insurance isn’t enough to fully compensate you can be frustrating and overwhelming. Fortunately, additional sources of recovery may still be available, and taking the right steps early may help preserve your ability to pursue full compensation.

If your damages exceed the available insurance coverage:

• Do not accept a quick policy-limits settlement offer before you understand the full value of your claim and every available source of coverage
• Request confirmation of the at-fault driver’s policy limits in writing from their insurer
• Review your own policy for UM/UIM coverage, including whether it is stacked
• Identify whether an employer, rideshare company, or other party may share responsibility
• Keep every medical record and bill, since the total value of your claim drives every negotiation that follows
• Contact RTRLAW before signing any release, since accepting a policy-limits settlement can close the door on other avenues of recovery

Even when the at-fault driver’s policy limits are exhausted, your options may not be. Carefully evaluating every available insurance policy and potential source of liability can often make a substantial difference in the overall recovery available to you and your loved ones.

Frequently Asked Questions About Exceeding Policy Limits

Does the at-fault driver have to pay the difference out of pocket?

Legally, yes, but collecting from an individual with limited assets is often difficult in practice. Insurance-based sources of recovery, such as UM/UIM coverage and umbrella policies, are usually more realistic paths to full compensation.

Can I recover from my own insurance company even though the crash was not my fault?

Yes. UM/UIM coverage exists specifically for situations where the at-fault driver’s insurance is insufficient, regardless of who caused the crash.

What if I already accepted the at-fault driver’s policy limit?

Accepting a settlement and signing a release generally ends your ability to pursue that driver further, though it does not necessarily affect a UM/UIM claim against your own insurer, provided you followed your policy’s notice requirements. This is exactly why it matters to understand every option before signing anything.

How do I find out if the at-fault driver has an umbrella policy?

This typically requires formal discovery once a claim or lawsuit is underway. Insurers and defendants are not required to volunteer this information upfront, which is one of the practical reasons to involve an attorney early.

Is a bad faith claim the same thing as my original injury claim?

No. A bad faith claim is a separate legal claim against the insurance company itself, based on how it handled the settlement process, and it generally cannot proceed until the underlying injury claim has been resolved.

Does having an umbrella policy on my own auto insurance help if I am the one injured?

Generally no. Your own umbrella policy typically covers your liability to others, not injuries you suffer. Your own UM/UIM coverage, not your umbrella policy, is what protects you when someone else’s coverage runs out.

Why would an insurance company risk a bad faith claim instead of just settling within limits?

Some insurers underestimate a claim’s value, dispute liability entirely, or simply gamble that a claimant will not pursue the case aggressively enough to create bad faith exposure. Others miscalculate the risk. Either way, the possibility of a bad faith claim is one of the main incentives that pushes insurers toward reasonable settlements rather than lowball offers.

Does Michigan’s no-fault system change any of this?

Yes. Michigan claimants have to clear the state’s serious-impairment threshold under MCL 500.3135 before pursuing the at-fault driver’s liability policy at all. Once that threshold is met, the same policy-limit issues described throughout this guide, including underinsured motorist coverage and pursuing additional liable parties, apply the same way they do in Florida, Texas, and Massachusetts.

Getting Full Value When One Policy Is Not Enough With RTRLAW

A low policy limit is a starting point for these cases, not the ending point. Between UM/UIM coverage, additional liable parties, umbrella policies, and the bad faith and Stowers doctrines (or comparable too) that push insurers to settle fairly, all Florida, Texas, Michigan, and Massachusetts law gives injury victims real tools to recover more than what a single inadequate policy would otherwise pay.

RTRLAW has been fighting for accident victims since 1988, true to our commitment to Retain The Flame for every client we represent. You can review additional client case results on our site. If your damages may exceed the at-fault driver’s insurance, contact RTRLAW by calling 1-833-HIRE-RTR today for a free, no obligation case review. We handle car accident claims on a No Win, No Fee basis, and our team is available 24 hours a day, 7 days a week.