When your damages after a car accident exceed insurance limits, you can seek payment from other sources. These options may include filing an Underinsured Motorist (UIM) claim with your own insurance provider or pursuing a personal injury lawsuit directly against the at-fault driver.
The challenge often involves identifying all potential paths to recovery, which requires a careful review of your own policy and an investigation into the other driver's financial standing. A Michigan car accident lawyer’s proactive and informed approach can protect your financial health.
Key Takeaways for Exceeding Insurance Limits
- Michigan's no-fault laws require your own Personal Injury Protection (PIP) to cover initial medical expenses, but severe injuries often go beyond basic coverage.
- Your own Underinsured Motorist (UIM) coverage acts as a vital safety net when the at-fault driver's policy falls short.
- An investigation into the at-fault driver's assets can determine if a personal lawsuit is a viable path for collecting a judgment.
- Insurance companies may attempt to settle your claim for the policy limit quickly, which can prevent you from seeking further compensation.
Insurance Policy Limits in Michigan
Michigan's auto insurance laws create a specific framework for how accident victims receive compensation. The state's no-fault system is the starting point for your recovery, but severe injuries often require you to seek payment from the at-fault driver's liability coverage.
A severe injury can lead to hundreds of thousands of dollars in medical bills, long-term rehabilitation costs, and lost earning capacity.
If the at-fault driver carries only the state-mandated minimum liability coverage, a significant gap can emerge between your total damages and their available insurance.
Michigan’s No-Fault Insurance System Explained
Michigan operates under a no-fault auto insurance system. This means that after a crash, your own insurance company pays for your initial medical expenses and lost wages through your Personal Injury Protection (PIP) benefits, regardless of who caused the accident.
However, for severe injuries that result in significant, long-term damages, PIP benefits may not be sufficient. In cases of serious impairment of a body function, permanent disfigurement, or death, you can step outside the no-fault system.
You can then file a liability claim against the at-fault driver for non-economic damages like pain and suffering. You can also seek payment for excess medical bills and excess lost wages.
What Are Bodily Injury Liability Limits
Once you meet the threshold to file a claim against the at-fault driver, their Bodily Injury (BI) liability limits come into play. These limits define the maximum sum an insurance company will pay for the injuries a policyholder causes.
Michigan law mandates specific minimum coverage amounts, but drivers can purchase higher limits for greater protection. The limits are typically expressed with two numbers, such as $250,000/$500,000 or $50,000/$100,000, with a signed waiver.
The first number represents the maximum payout for a single person's injuries in an accident. The second number is the total maximum payout for all injuries in a single accident, regardless of how many people were hurt.
When your damages surpass that first number, you face a situation where the car accident exceeds insurance limits.
The Role of Property Protection Insurance (PPI)
Property Protection Insurance (PPI) is another mandatory coverage under Michigan's no-fault laws. This component of your auto policy covers damage your vehicle causes to another person's property within Michigan. PPI doesn’t cover damage to other vehicles, except for legally parked cars.
PPI provides up to $1 million in coverage for damage to stationary objects like buildings, fences, and legally parked cars. While PPI is essential for property-related damages, it doesn’t apply to your bodily injuries.
When your injuries create massive expenses, you must look to the at-fault driver's BI liability limits, not their PPI coverage.
When the At-Fault Driver's Insurance Isn't Enough
Discovering that the at-fault driver’s coverage is inadequate can feel disheartening. Fortunately, other possibilities for compensation may be available. These options primarily involve your own auto insurance policy.
Filing an Underinsured Motorist Claim
One of the most effective solutions when damages exceed policy limits is your own Underinsured Motorist (UIM) coverage. UIM coverage is an optional protection you can purchase as part of your auto insurance policy.
If the at-fault driver’s BI liability limits are insufficient to cover your damages, your UIM coverage can bridge the financial gap.
After you meet the requirements in your policy, you can then formally file a claim with your own insurance company for the remaining damages, up to the limits of your UIM policy. This process requires careful coordination and adherence to your policy’s specific requirements.
What Does Underinsured Motorist Coverage Include?
Your UIM policy covers the same types of losses that the at-fault driver’s liability insurance covers, but it only activates after the other driver’s policy limits are addressed based on the rules in your policy.
Common examples include:
- Excess Medical Expenses: It covers hospital bills, surgeries, rehabilitation, and future medical care costs that surpass the at-fault driver's liability limit.
- Lost Wages and Earning Capacity: Underinsured Motorist coverage can compensate you for income lost while you were unable to work, as well as the loss of your ability to earn money in the future.
- Pain and Suffering: This coverage provides payment for the physical pain, emotional distress, and loss of enjoyment of life resulting from your injuries.
- Other Non-Economic Damages: This addresses other intangible losses, such as scarring, disfigurement, or long-term disability resulting from the accident.
Pursuing a Personal Lawsuit Against the At-Fault Driver
If you don’t have UIM coverage or if your damages exceed even your own UIM limits, the next step may be to investigate the at-fault driver’s personal finances. An asset search is a formal investigation to determine if the negligent driver has sufficient personal assets to satisfy a judgment.
The Process of Suing a Driver Personally
The process begins by filing a formal complaint in civil court, which outlines the facts of the accident, establishes the other driver's negligence, and specifies the damages you have suffered. The defendant, now a party to the lawsuit, must formally respond to these allegations.
From there, the case enters a phase called discovery, where both sides exchange information and evidence. This may include depositions, written questions, and requests for documents.
Many cases settle during or after discovery, but if no agreement materializes, the case can proceed to trial, where a judge or jury will determine the outcome and award damages if you win.
Potential Assets You Can Pursue
If you obtain a court judgment against the at-fault driver, you can then move to collect on that judgment. The court doesn’t pay you directly; instead, you must take legal steps to seize the defendant's assets.
Common examples include:
- Real Estate: You can place a lien on non-homestead properties, such as vacation homes or rental properties, which must be paid if the property is sold.
- Bank Accounts: A legal process known as garnishment allows you to seize funds directly from the defendant's bank accounts.
- Wages: You can obtain a court order to garnish a portion of the at-fault driver's wages directly from their employer.
- Valuable Personal Property: High-value assets like boats, recreational vehicles, or expensive art and jewelry can sometimes be seized and sold to satisfy the judgment.
Challenges of Collecting a Personal Judgment
Winning a lawsuit does not guarantee payment. A primary challenge is dealing with a judgment-proof defendant—someone who lacks the assets or income to satisfy a judgment.
Suing an at-fault driver personally may not be practical if they have no significant assets, as you cannot collect from someone who has nothing.
Furthermore, state and federal laws protect certain assets from seizure, such as primary residences (homesteads), retirement accounts, and some forms of public benefits.
How a Lawyer Helps When a Car Accident Exceeds Insurance Limits
When your claim for a car accident exceeds insurance limits, the legal and financial complexities multiply. An experienced attorney can provide critical support and manage the process of securing the full compensation you need.
An attorney takes on several specific tasks, including:
- Comprehensive Damage Calculation: A personal injury lawyer works with medical and financial experts to accurately calculate the full, long-term cost of your injuries, including future medical treatments, lost earning capacity, and permanent impairments.
- Strategic Insurance Negotiation: They manage all communications with both the at-fault driver’s insurer and your own insurance company, positioning your UIM claim for success while protecting you from tactics designed to reduce your payout.
- Thorough Asset Investigation: Your legal team can conduct a detailed asset search of the at-fault driver to determine if filing a personal injury lawsuit is a financially viable option for you.
- Litigation and Court Representation: If a lawsuit becomes necessary, your attorney will handle every aspect, from filing the initial complaint and managing the discovery process to representing your interests powerfully in court.
FAQ for Exceeding Insurance Limits
What Is the Difference Between Uninsured and Underinsured Motorist Coverage?
Uninsured Motorist (UM) coverage applies when the at-fault driver has no auto insurance at all or in a hit-and-run crash where the driver is unidentified.
Underinsured Motorist (UIM) coverage applies when the at-fault driver has insurance, but their policy's liability limits are too low to cover your total damages from the accident.
How Do I Find Out the Other Driver’s Policy Limits?
Typically, the at-fault driver’s insurance company will disclose the policy limits once you can demonstrate that your damages will likely exceed those limits. Providing medical bills and other proof of loss often prompts this disclosure.
An attorney can formally request this information and use legal tools to obtain it if the insurer is uncooperative.
How Does My Health Insurance Affect My Accident Claim?
Your health insurance can play a secondary role after a car accident. In Michigan, your auto insurance's Personal Injury Protection (PIP) is the primary payer for your medical bills up to its chosen limit.
If your PIP benefits run out, your health insurance may then begin to cover your treatment costs. However, your health insurer will likely seek reimbursement from any settlement you later receive from the at-fault driver or your UIM policy through a process called subrogation.
Should I Accept a Policy Limit Settlement Offer?
You must exercise caution before accepting any settlement. Insurance companies often try to resolve claims quickly by offering the full policy limit. Accepting this offer and signing a release form will permanently prevent you from seeking any more money from that driver or their insurer.
It can also affect your ability to file a UIM claim with your own provider, as many policies require you to secure the at-fault insurer's limits first. An attorney's review of any offer helps protect your rights to pursue all options for full compensation.
Will My Insurance Rates Go Up if I File an Underinsured Motorist Claim?
Michigan law generally prohibits insurance companies from raising your rates for filing a claim for an accident that wasn’t your fault. An underinsured motorist claim falls into this category.
Filing a UIM claim shouldn’t negatively affect your premiums, as you’re utilizing coverage you paid for to protect yourself from another driver's negligence. However, insurers can raise rates at renewal for general risk factors unrelated to your accident.
Take the First Step Toward Financial Security
When you’re recovering from a serious injury, your focus must remain on your health and well-being. The financial stress that comes from a car accident that exceeds insurance limits can interfere with that recovery.
If you have questions about your rights and options, Michigan Injury Lawyers is here to provide answers. Our team has the experience to handle these complex cases and fight for the resources you need to rebuild. Call us today at (248)-454-0800 to discuss your case.
Thomas L. Stroble
FOUNDER
Mr. Stroble is a highly accomplished graduate of Michigan State University, with degrees in both science and law. He specializes in commercial lawsuits and personal injury cases. Licensed to practice law in Michigan and even the U.S. Supreme Court, he’s a well-qualified legal expert. Besides his career in law, he loves outdoor activities and volunteers as a part-time police officer in Birmingham.
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