What Happens When a Car Accident Claim Exceeds Insurance Limits?


If a car accident claim is for more than what is covered by insurance, there are options to keep you from paying out of your own pocket.

More than 87% of drivers in the U.S. have auto insurance for a very good reason – it covers property damage and medical costs, which can get very expensive, very quickly.

But what happens when the costs of an accident exceed the insurance policy limit? The expenses don’t go away, and someone still has to pay. If you are not at fault, you have three options:

  • Get the at-fault driver to pay
  • Determine if you have coverage that can fill in the gaps
  • File a lawsuit.

If you are at fault, or live in one of 12 no-fault insurance states, that means finding a way to come up with the money to pay the damages.

The 48 states that require car owners to have insurance have minimum coverage limits. All of them require liability coverage – if you’re at fault, it covers the other vehicle’s damages and bodily injury. Some states also require uninsured motorist coverage, which covers you in an accident with an at-fault uninsured or under-insured driver.

Your insurance policy sets limits on how much the company will pay if you’re in an accident. The more you’re covered for, the higher your premium.

If you look at your auto insurance card, you’ll see numbers that look like this: 10/20/10. They indicate in thousands of dollars what your coverage is for, in order, bodily injury liability for one person, bodily injury liability for all persons and property damage liability. In this example, the most the insurance company would pay if you were at fault in an accident is $10,000 for one person’s injuries, $20,000 for all those injured and $10,000 for property damage.

Maine and Alaska have the highest compulsory limits – 50/100/25. Among the lowest is Florida, a no-fault state (each driver covers their own damages), at 10/20/10.

Most motorists who have insurance get more than their state’s minimum. Some 78% of insured drivers have comprehensive coverage, which pays for things like theft, damage not caused by an accident, and more. Some 74% have collision coverage, which pays for damage to your own car, no matter who’s at fault for the accident, up to the value of the car.

How Often Do Damages from Accidents Exceed Policy Limits?

Differences in state car insurance laws, how states manage claims, differences in the costs of medical care and repairs, how values are assessed, and more make statistics involving claims difficult to track. In general, though, most auto accident damages are settled within the limits of insurance, because the alternatives can be expensive and difficult.

But there are situations in which the claims will exceed policy limits, or the at-fault driver isn’t insured at all. Some 1 in 8 drivers on the road don’t have car insurance; another 1 in 5 have the minimum required.

What Are the Options When Damages Exceed Insurance Coverage?

Many drivers have uninsured motorist coverage to help pay the costs if they’re in an accident with a driver who doesn’t have insurance, or doesn’t have enough insurance to cover damages from an accident.

Uninsured motorist coverage cannot be for a higher amount than your liability coverage. For instance, if you have $50,000 in liability coverage, your uninsured motorist coverage can’t exceed $50,000. If the other driver causes $75,000 in damage, you’re still responsible for the other $25,000.

If you don’t have uninsured motorist coverage, or the costs from the accident are more than what insurance covers, options are:

  • Get the at-fault driver to pay out of pocket. This can be difficult to do. If the driver doesn’t have assets of money to pay or if the other driver knows how to hide assets.
  • File a lawsuit against the at-fault driver. Car accident judgments are higher for plaintiffs who are represented by an attorney who knows the law associated with accident damages and how to make the best case to get a settlement or judgment.
  • File a bad faith lawsuit against the at-fault driver’s insurance company. It would be a good idea to hire an attorney familiar with this type of lawsuit, which argues the insurance company didn’t pay what it should have.

What Happens When Property Damage Exceeds Insurance Coverage?

If your car is damaged in an accident beyond what the other driver’s insurance covers, or if the driver wasn’t insured, uninsured motorist coverage or collision coverage would kick in. That is, if you have those with your policy.

While uninsured motorist coverage is required in 20 states for bodily injury, only seven of them require it for property damage. But any motorist, in any state, can buy it up to the same limit of their liability coverage.

Collision coverage is not required in any state, but makes sense to have. It pays for damage to your own car, no matter who is at fault, up to the listed value of your car.

You can also file a lawsuit, even if the accident only had property damage. You can take the other driver to small-claims court or, if the property damage was extensive and caused a loss of income or other expenses, hire a lawyer to help determine your options.

What Happens If Medical Bills Exceed Policy Limits?

Bodily injury is by far more costly than property damage in car accidents. Injuries can cause loss of income, long-term medical bills, permanent disability and more. The majority of lawsuits filed seeking vehicle accident damages are filed to recover medical expenses.

If you have proven you are not at fault and your medical bills exceed the limits of the at-fault driver’s policy, you have a few options to cover your medical expenses.

Most health insurance policies will pay for injuries sustained in a car accident, once the auto insurance options have been exhausted.

Personal injury protection (PIP) is required in all 12 no-fault states. PIP covers your own medical bills (not the other driver’s). MedPay is another insurance add-on that will pay medical expenses.

If the costs exceed the at-fault driver’s insurance, another option is to file a lawsuit seeking compensation. Severe injuries, particularly head or spinal trauma, can mean long-term and expensive medical bills.

Judgments from lawsuits that are represented by an attorney are higher than those where the plaintiff represents themselves. A personal injury attorney has the resources to investigate the accident and deal with the insurance companies. An attorney can also look into whether there are other entities that may be liable. That could include the car manufacturer or the other driver’s employer, if they were on the job when the accident happened.

An attorney may also file a bad faith lawsuit against the insurance company, if they find it didn’t cover expenses that it should have.

What Happens If Someone Sues You for More Than Your Insurance Covers?

If you are at fault in a car accident and someone sues you for damages that exceed your coverage, you may end up being ordered by the court to pay out of pocket. If you don’t have the money, the court can order that your wages be garnished or a lien be put on your property, which means you can’t sell it without paying the judgment.

Some people in this position file for Chapter 7 bankruptcy to avoid paying. While bankruptcy will discharge the judgement debt, the bankruptcy will stay on your credit report for 7-10 years and will severely damage your chances of receiving credit for a mortgage or car loan.

The first thing you should do if you are at fault in a car accident and the damages exceed your insurance coverage is to hire an attorney. An attorney can minimize the damage to your finances and determine what your options are, potentially keeping you out of court.

Maureen Milliken

Maureen Milliken has a three-decade career as a journalist at daily newspapers and publications that focus on business and consumer finance. She covered several beats during her newspaper career, including local and state news, features on prominent public officials and several years running a sports department. She is a subject expert on topics that include consumer debt, consumer credit, labor issues, financial abuse, rural development, and legal matters resulting from accidents in the workplace and on the roads. She is adept at presenting complicated topics in an easy-to-read format that helps readers understand the topic's impact on their lives … and their pocketbooks!

Home » Car Accident » FAQs » What Happens When a Car Accident Claim Exceeds Insurance Limits?

Car Accident?
Get Expert Help

Receive a free consultation and discover your options.

Car Accident FAQs Menu


  1. N.A. (ND) Facts and Statistics: Auto Insurance. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-auto-insurance
  2. N.A. (ND) Facts and Statistics: Uninsured motorists. Retrieved from https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists
  3. N.A. (2022, January 31) 2018/2019 Auto Insurance Database Report. Retrieved from https://content.naic.org/sites/default/files/publication-aut-pb-auto-insurance-database.pdf
  4. N.A. (2021, March 22) One in Eight Drivers Uninsured. Retrieved from https://www.insurance-research.org/sites/default/files/downloads/UM%20NR%20032221.pdf