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What Are Policy Limits and How Do They Affect My Claim?

Published on Feb 28, 2022 at 8:04 pm in Personal Injury.

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When you’ve been hurt in an accident caused by another party, you hope that the at-fault party has insurance coverage, and enough of it, to fully cover the losses you suffered. When it comes to insurance policy limits, the maximum amount the company has agreed to pay out doesn’t always match the amount you deserve to be compensated.

You need the help of an experienced legal representative to ensure your expenses, such as medical bills, ongoing doctor’s visits, lost wages, and other costs, are fully covered after your accident. A lawyer who understands how Texas insurance law works and how to get you the compensation you deserve can change the course of your financial future after a debilitating accident.

What Are Insurance Policy Limits?

Regardless of the type of insurance you’re dealing with, there are always limits attached. A policy limit (or insurance policy limit, limit of liability, liability limit, or insurance coverage limit) is the maximum amount that an insurance provider must pay out for damages for a covered claim. Insurance companies are not legally required to pay more than this limit; hence the term “cap” is used to describe this maximum obligation.

For example, if your homeowner’s insurance has a policy limit of $200,000, that is the most your insurance company will pay after an event. Even if your damages exceed this amount, the company is not legally obligated to pay anything above this limit.

Policy limits are critical when it comes to accidents in which one party is at fault for another party’s damages. This is especially true for auto insurance. Car accidents are one of the most common scenarios requiring one party’s insurance policy to cover another’s injuries. When you are involved in a car accident, and the other driver is at fault, their liability insurance should cover your losses. This means you can only be compensated up to the at-fault driver’s policy limit through their insurance.

What Are Mandatory Auto Insurance Limits in Texas?

It’s easy to see why there are laws governing the minimum policy limit requirements for many types of insurance. If, for example, a vehicle owner only purchases $100 of liability insurance, a person hurt in a collision caused by that driver will only be able to collect $100 toward their medical expenses, property damage, lost wages, and other damages. This would clearly be a highly unfair situation. Most states have devised a system of laws dictating minimum limits on many types of insurance, especially motor vehicle coverage, to address this problem.

Texas auto insurance laws require motorists to have at least $30,000 bodily injury liability per person, up to $60,000 bodily injury liability per accident, and $25,000 property damage liability. Although these are the legal minimums, it doesn’t mean that a driver shouldn’t look into a policy with higher limits. If a driver causes a car accident, the minimum liability limits might not be enough to cover all the damages incurred in the accident—especially if there are multiple vehicles involved or if a victim’s injuries are catastrophic.

Keep in mind that these limits apply to non-commercial passenger vehicles, including motorcycles, which are in the same category as cars when it comes to registration, titling, and insurance requirements in Texas.

Commercial trucking companies are subject to a different set of insurance laws. Accidents involving commercial trucks are often much more complicated than those involving passenger vehicles.

What Other Personal Injury Claims Can Policy Limits Affect?

A policyholder’s insurance coverage limits don’t just play a role in auto accident cases, but other personal injury ones as well. For example, these limits matter when a customer in a store or restaurant ends up slipping and falling on objects or liquids left in walking areas. Business owners must carry adequate insurance to cover the losses suffered by the fall victim.

The same logic applies to other accidents on another person’s property. These incidents might include:

  • Dog bites
  • Swimming pool accidents
  • Elevator malfunctions

A property owner’s policy limits will need to be considered before you file virtually any type of premises liability case.

If your injury occurred in a health care setting, like a hospital, physician’s office, dentist’s office, or urgent care center, you may be looking at filing a medical malpractice claim. It’s well known that healthcare providers don’t always carry policies with limits that accurately reflect the actual expenses incurred by victims of medical negligence. The physical and emotional trauma and lasting implications of a medical mistake are always costly. An experienced lawyer is needed to protect victims of medical malpractice from receiving unfairly low compensation.

For those injured at work, your attorney will also need to look into the policy limits of your employer’s insurance policy. In Texas, a state which doesn’t require most small businesses to carry workers’ compensation insurance, claims involving a work injury can be extremely complicated. Your lawyer will need to thoroughly investigate all aspects of your employer’s insurance coverage and applicable laws to make sure that you receive the compensation you need for recovery.

What Legal Options Do I Have When Policy Limits Are Too Low?

Recovery is expensive. As a Houston personal injury law office, we at The Mejia Law Firm are all too familiar with the incredible and often unimaginable impact an injury can have on a person’s life. While you may expect expenses such as medical bills, very few people are actually able to anticipate the totality of what their injury will take from them. Many people don’t plan for expenses like an ambulance ride, child care, pet sitting, transportation to appointments, food delivery services, therapy and rehabilitation, or accommodations to a home or vehicle after loss of mobility. And when you’re not able to work and earn income, these expenses can seem even more unrealistic.

Your legal advocate from The Mejia Law Firm will not let another party’s inadequate policy limit hinder you from achieving the financial recovery you need and deserve. When the at-fault party’s insurance coverage isn’t enough, we look into other options on your behalf. These types of situations are never simple, but we have the experience necessary to successfully navigate difficult cases. Filing a claim sometimes involves you needing to:

  • Collect under an umbrella insurance policy
  • Filing suit against additional involved defendants
  • Identifying and fighting insurance company negligence
  • Recovering from the at-fault party directly

Your lawyer will be able to guide you toward the most appropriate steps to secure adequate compensation.

We invite you to fill out a free English or Español case evaluation form. An attorney from The Mejia Law Firm will be in touch soon to discuss your legal options with you in person. We never charge a fee for our case evaluation service.

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