Policy Limit Demand In A Personal Injury Case Explained

Friday, May 26, 2023

Policy Limit Demand In A Personal Injury Case Explained

Written by Malman Law, reviewed by Steve J. Malman.

Accidents can happen unexpectedly, harming you physically and financially. These events and the resulting losses frequently involve insurance policy limits. So, how can you get the financial support you need within the policy limits prescribed?

You can get the compensation you need by having your personal injury lawyer send a policy limit demand letter to an insurer with a settlement demand. The process begins by detailing the nature of the accident, the resulting injuries, liabilities, and expenses related to the policy limits and guidelines.

The policy limit for insurance policies covers liability, settlement demands and claims, personal injury damages, and third-party claims in the context of attorney-client relationships in personal injury cases.

Therefore, a policy limit demand letter in a personal injury case asks that an insurance company pay the established policy limits to reduce their insured’s risk of financial instability.

It’s important to respond quickly in this type of personal injury case, as the clock for injuries stops ticking after two years.

What Are Insurance Policy Limits?

In simplest terms, policy limits are established to set the caps for payouts for insurance compensation or benefits.

Let’s look at an example:

Suppose you get into an auto accident. If you have a $500,000 limit available, you’ll only receive that amount from the insurer to pay for property damages, medical bills, lost wages, and other applicable damages. Even if the damages are higher, that’s what you’re typically entitled to receive.

However, a bad-faith attempt by an insurance company to reject your liability settlement gives you an opportunity to work with a personal injury attorney. They can help you receive an excess judgment – a settlement that goes above the policy limit.

Therefore, an insurance company cannot use its superior position or knowledge to deny claims or avoid making insurance payments. Again, that is why you need to consult with an attorney – someone who understands the entire process and can help you through each step.

The insurer has the duty to deal fairly with its clients. If the insurance company fails to accept your offer – one that is considered reasonable, you can file a bad faith lawsuit and a policy limits demand letter to collect excess damages and reimbursement.

Legally, the insurance company is obligated to make a good-faith attempt to settle after it receives a reasonable offer.

Examples of Bad Faith

If your insurance company ignores your phone calls, letters, or emails or refuses to negotiate with you after you’ve filed a claim, they are dealing in bad faith.

Failing to deny or pay a claim within a reasonable time frame or refusing to come to a fair and reasonable settlement when the liability is apparent are also examples of bad faith.

Bad faith negotiators often stall the proceedings by assuming a non-accountable position. For example, they may insist that they have to wait on their superiors for an answer to excuse their inactivity.

Needless to say, when this happens, you need to gain more of an edge legally. That is why you need to confer with a lawyer to ensure you successfully resolve your claim.

While an insurance company may refuse an insurance offer, they cannot act out of bad faith.

What a Policy Limits Demand Letter Should Include

A policy limits demand letter must show that an insurance carrier did not negotiate in good faith and therefore failed to settle a claim.

The Primary Elements

The policy limits settlement demand letter should include the following elements:

  1. An accident description
  2. The nature of the losses and injuries
  3. The applicable policy limits and why probable liability may give the plaintiff more than the stated limits
  4. A reasonable settlement demand offer

You should discuss the probable liability of a bad faith insurance company with a personal injury attorney before they draft the policy limits demand letter. This will ensure that the policy limits demand is reasonable and that the negotiations can proceed.

Why You Should Work With An Attorney?

An attorney can greatly help you receive a just settlement. They will do this by taking the following actions:

  • They’ll determine if bad faith or probable liability exists
  • They’ll write a settlement policy limits demand letter for the insurance company’s review
  • They’ll argue on your behalf and support you if the insurance company does not act reasonably
  • As a community-based legal representative or as someone who gives back to the community, they can provide the sympathy needed to ensure you’re fairly treated

In other words, a dedicated attorney will review the policy limits and determine if you can recover financially and legally.

What You Can Receive from a Policy Limits Demand

If an insurance company does not negotiate in good faith or give your interests reasonable weight, then it may have to pay more than the limits of the policy.

To go forward, then, you need to show that the insurance company did not respond in good faith. If you succeed, the insurance company may have to give you the entire value of your damages judgment – over the policy limits.

This would mean that your damages – medical costs, lost wages, property damages, pain, suffering, etc. – would be paid in full. That is why it is important to seriously consider your stake in a policy limits case. Doing so can significantly impact recovery.

Examples of Successful Policy Limit Cases

Let’s look at some examples of cases involving a policy limits claim:

  • Malman Law received a $1 million policy-limits settlement for a client who suffered ongoing problems due to soft tissue injuries from a car crash
  • Our firm obtained a policy-limits settlement of $300,000 for a woman who suffered a broken leg in an accident

Contact PI Lawyer If You Have a Policy Limits Case Right Away

Have you been in an auto accident or suffered other injuries in Chicago? Are you having problems with insurance company negotiations or processing? If so, you need to consult with an experienced lawyer. Legal assistance is imperative if you want to be successful in receiving damages for accident-based injuries. Call Malman Law now and schedule a consultation right away.


Steve Malman

Malman Law’s founder Attorney Steven Malman has over 30 years of experience handling personal injury, nursing home, medical malpractice, truck accidents, car accidents, premises liability, construction, and workers’ compensation cases in Chicago, IL.

Years of experience: +30 years
Justia Profile: Steve Malman
Illinois Registration Status: Active and authorized to practice law—Last Registered Year: 2024

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