What Happens When a Car Insurance Claim Exceeds Policy Limits in PA?

Question from Vjj, What Happens When a Car Insurance Claim Exceeds Policy Limits in PA?

Answer from AI:

When you’re involved in a car accident in Pennsylvania (PA), the process of filing an insurance claim can be straightforward until the cost of damages or personal injuries exceeds the at-fault driver’s policy limits. Pennsylvania’s unique auto insurance laws, including the choice between “limited tort” and “full tort” coverage, further complicate these situations. Understanding what happens next is crucial for anyone navigating this scenario.

Understanding Policy Limits

First, it’s important to grasp what policy limits are. These are the maximum amounts an insurance company will pay for a single accident under a policy. In Pennsylvania, drivers are required to carry minimum liability coverage, but many opt for higher limits for added protection. However, severe accidents can easily result in damages that exceed these amounts.

Limited Tort vs. Full Tort

Pennsylvania allows drivers to choose between limited tort and full tort coverage when they purchase auto insurance. This choice significantly affects your ability to sue for damages after an accident:

• Limited Tort: Offers a reduction in premiums but limits your ability to sue for pain and suffering unless the injuries meet a “serious injury” threshold, as defined by state law.
• Full Tort: Costs more but allows you to sue for pain and suffering without restrictions.

Steps When a Claim Exceeds Policy Limits

If you’re involved in an accident and the damages exceed the at-fault driver’s policy limits, several steps and considerations come into play:

1. Notification: The insurance company will notify the policyholder if it appears that the claim may exceed the policy limits. This is often referred to as an “excess letter.”
2. Personal Contribution: The at-fault driver may be personally responsible for any amount not covered by their insurance. This can lead to financial strain, highlighting the importance of having adequate coverage.
3. Underinsured Motorist Coverage: If you have underinsured motorist coverage on your own policy, you may be able to file a claim with your insurance to cover the difference. This coverage is optional in Pennsylvania but highly recommended.
4. Legal Action: If the at-fault driver’s insurance and your underinsured motorist coverage are insufficient to cover your damages, you may consider taking legal action against the at-fault driver personally. However, collecting on such a judgment can be challenging if the individual has limited assets.

Seeking Legal Advice

Navigating the aftermath of an accident where damages exceed policy limits can be complex, especially considering Pennsylvania’s limited tort system. It’s often in your best interest to consult with a legal professional who can provide personalized advice based on the specifics of your case. An attorney can help you understand your options, including the feasibility and potential outcomes of legal action.

For more information on Pennsylvania’s auto insurance requirements and options, you can visit the Pennsylvania Insurance Department’s guide to auto insurance. This resource offers detailed explanations of coverage types and the state’s unique insurance laws.

Remember: Every situation is unique, and while general guidelines can provide a starting point, they cannot replace the tailored advice of a legal professional. If you find yourself facing damages that exceed an insurance policy’s limits, seeking legal counsel can help you navigate the complexities of your specific circumstances.