In Michigan, auto accident settlements rarely exceed the policy limits but it can happen under these three unique circumstances: 1) when a jury returns an over-policy-limits verdict, 2) where the at-fault driver has sufficient assets to pay in excess of his or her coverage, 3) when there is an insurer “bad faith.”
An insurance bad faith lawsuit may be possible if an insurer fails to protect their insured. Depending on the laws of the state and whether the case constitutes bad faith, the at-fault driver can assign his or her own bad faith claim against his or her own insurance company to the plaintiff.
Auto accident settlements that exceed the policy limits of a defendant are difficult, but they are not impossible. I have accomplished this for my own clients on many occasions.
I began my career by collecting 5 times the insurance policy limits on a case where the insurer only offered $10,000 to settle the case before trial (the verdict was over $1 million). In another case I handled involving a wrongful death, I was able to secure a settlement for the family that included $3 million dollars in personal contribution over the wrongdoer driver’s insurance policy limits.
In another case where I was representing a little girl who had suffered a brain injury, the auto insurance company for the at-fault driver who injured my client had to offer twice the policy limits during a trial to avoid being sued for “bad faith” by its insured for exposing the insured to an excess auto accident verdict that would have been over the limits of the insured’s liability insurance policy. I should note that this type of situation is extremely rare. It requires an experienced auto accident attorney who is familiar with bad faith law and who knows how to set up a potential claim for bad faith during a car accident lawsuit if the insurer fails to protect their insured by offering policy limits to settle a case before a trial verdict.
What happens when a car accident claim exceeds the insurance limits?
When auto accident settlements happen to exceed the policy limits usually one of three things result: the settlement will have a personal contribution over the policy limits by the at-fault driver; a jury will return an “over limits” verdict against a collectible defendant; or a bad faith claim or can be brought.
When a bad faith lawsuit is brought then this means the at-fault driver’s insurer is failing to reasonably settle the claim within the insurance limits, thereby exposing their own insured to an excess judgment and the defendant assigns his or her own bad faith cause of action to the plaintiff. The plaintiff in exchange agrees not to pursue collection against the at-fault driver.
How UIM coverage can help when auto accident settlements exceed the policy limits
One of the goals of “underinsured motorist” coverage is to provide coverage to compensate a victim for pain and suffering compensation and other economic damages that exceed the liability insurance policy limits of the at-fault driver.
In cases where the auto accident settlements exceed the policy limits, when an at-fault driver who does not have enough liability insurance to cover medical expenses, the crash victim’s UIM coverage will likely be his or her only source to provide more adequate legal recovery.
We recommend that all drivers carry “underinsured motorist” coverage and we recommend that they purchase UIM coverage with limits of at least $500,000.
Collecting injury compensation beyond the insurance limits in car accident lawsuits
There are several approaches to collecting injury compensation beyond the insurance limits of the at-fault driver’s liability policy: (1) recovery through “underinsured motorist” insurance; (2) getting the driver to agree to use his or her personal assets to pay; (3) a trial verdict in excess of the at-fault driver’s insurance, resulting in seizing the driver’s property or a judgment lien; and (4) a bad faith lawsuit against the insurance company for failing to properly protect their insured and settle the case within policy limits.
When auto accident settlements exceed the policy limits and seizing the driver’s property is ordered
If an auto accident settlement exceeds the policy limits then then the seizing of the driver’s property is ordered. This normally involves getting a court judgment against the at-fault driver and then getting an order from the court directing the county sheriff to seize and sell the driver’s “personal property” (including but not limited to motor vehicles or money, wherever located) to pay for and satisfy the portion of the judgment that is not covered by the at-fault driver’s
When auto accident settlements exceed the policy limits and judgment lien is recorded
A judgment lien involves getting a court judgment against the at-fault driver and then obtaining and recording a judgment lien against the property owned by the at-fault driver at the time and any “after acquired property.” (MCL 600.2803) The judgment lien is an encumbrance on the real property which prevents the at-fault driver from selling it because with the judgment lien attached, clean title to the property cannot be obtained.
How do you ensure you will receive the maximum car accident settlement?
To ensure you will receive the maximum car accident settlement, you should hire an experienced auto accident attorney with a track record for securing top-reported verdicts and settlements and who has experience and understanding of bad faith insurance litigation. Your attorney should also do an asset check on the at-fault driver. Finally, every attorney has an obligation to investigate if there are other potential defendants and other layers of insurance, including excess and umbrella insurance coverage.
Michigan’s auto No-Fault law requires all drivers to carry a minimum of $250,000/$500,000 in liability insurance coverage. However, the law also gives them the option “to purchase lower limits” of $50,000 and $100,000. (MCL 500.3101(1); 500.3131(2); 500.3009(1)(a) and (b), (5))
If the vehicle being driven by the at-fault driver who injured you was an Uber or Lyft or a truck or commercial vehicle or if the at-fault driver was an employee of a business and acting within the scope of his or her employment at the time of the accident, then liability insurance coverage limits applicable to your settlement will likely be higher.
Problems when auto accident settlements exceed the policy limits
Two common problems when auto accident settlements exceed the policy limit are: (1) the at-fault driver lacks personal assets to pay out-of-pocket for the difference between a trial verdict against him or her and the limit of his or her liability insurance coverage; (2) the at-fault driver declares bankruptcy.
In either scenario listed above , the crash victim can potentially lose out, either because he or she is unable to collect the pain and suffering compensation, excess medical expenses and lost wages and other economic damages that he or she is legally entitled to – and which the at-fault driver is legally liable for – or because the the injury victim is prevented from collecting as the at-fault driver is judgment-proof.
Types of injuries involved in auto accident settlements that exceed the policy limits
The types of injuries that are commonly involved in auto accident settlements that exceed the policy limits of an at-fault, negligent driver who causes a crash are : (1) traumatic brain injuries; (2) spinal cord injuries to the lumbar and cervical spine, including herniated discs and spine surgeries; (3) catastrophic injuries.
Injured and need a lawyer for a car accident? Call Michigan Auto Law
If you were injured in a car accident and have questions about how auto accident settlements can exceed the policy limits, you can call toll free anytime 24/7 at (248) 353-7575 for a free consultation with one of our experienced auto accident attorneys to discuss your rights and what compensation and benefits you may be entitled to under the law. You can also get help from an experienced accident attorney by visiting our contact page or you can use the chat feature on our website.