Policy Limit Demand In A Personal Injury Case Explained

Tuesday, December 17, 2024

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.

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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.

Pain and Suffering Policy Limits

Pain and suffering policy limits depend on the at-fault party’s insurance policy and available coverage, which may restrict the compensation victims receive for non-economic damages. Insurance companies set liability limits within their policies, often dividing them into two categories: bodily injury per person and bodily injury per accident. For example, if a policy includes a $100,000 per-person limit and $300,000 per-accident limit, the maximum payout for pain and suffering and other damages is $100,000 for an individual or $300,000 collectively for all victims involved in the accident.

When damages exceed these limits, the remaining balance may fall on the at-fault party. In Illinois, personal injury plaintiffs have several options to pursue compensation beyond the policy limits, such as:

  • Identifying additional policies: For example, umbrella or excess liability insurance that could cover the shortfall.
  • Pursuing the defendant’s personal assets: In rare cases, if the at-fault party has significant assets, they may be held personally liable for the excess amount.
  • Exploring employer liability: If the at-fault party was acting within the scope of employment during the accident, their employer’s insurance might provide coverage.

An experienced attorney at Malman Law can assess these options to help injured victims in Illinois secure fair compensation for their pain and suffering.

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

STEVE J. MALMAN
Founding Attorney

Pain and Suffering Policy Limits in Illinois

Illinois law does not impose statutory caps on pain and suffering damages in personal injury cases. This means that an injured victim can potentially receive compensation for the full extent of their pain and suffering, provided it is supported by evidence. Nonetheless, insurance policies often impose limits on payouts, which can restrict recovery, particularly when the at-fault party’s policy has low liability limits.

For instance, under Illinois law, the minimum auto insurance requirement for liability coverage is $25,000 per person and $50,000 per accident for bodily injury. If a victim suffers severe injuries resulting in substantial pain and suffering, these minimums may be insufficient to cover all damages.

When policy limits are inadequate, the victim can look beyond the defendant’s insurance policy to identify additional sources of recovery. These may include uninsured or underinsured motorist coverage in the victim’s own policy or seeking damages from third-party defendants, such as vehicle manufacturers in defective product cases.

Comparative Negligence

Comparative negligence laws in Illinois can limit or bar recovery for pain and suffering if the plaintiff shares fault for the accident. Illinois follows a “modified comparative negligence” rule, which reduces the plaintiff’s damages in proportion to their percentage of fault. Still, if the plaintiff is 50% or more at fault, they cannot recover any damages at all.

For example, if a plaintiff incurs $100,000 in pain and suffering damages but is found to be 20% at fault for the accident, their compensation will be reduced by 20%, leaving them with $80,000. If their fault exceeds 50%, they receive nothing.

This principle is critical in pain and suffering claims, as defendants and their insurance companies often attempt to shift blame to reduce their liability. Hiring a skilled personal injury attorney to refute these claims and present compelling evidence of fault can make a significant difference in maximizing recovery.

Case-by-Case Basis

Compensation for pain and suffering in Illinois is determined on a case-by-case basis, depending on the evidence presented and the jury’s discretion. This individualized approach ensures that damages reflect the unique circumstances and impact of each case, but it also introduces variability. Factors that influence pain and suffering awards include:

  • The severity of the injuries: Catastrophic injuries like spinal cord damage or traumatic brain injuries often result in higher awards.
  • The duration of pain and suffering: Chronic pain or permanent disabilities can lead to increased compensation.
  • The evidence provided: Testimonies from medical experts, mental health professionals, and even the plaintiff’s family members can substantiate claims for emotional and physical suffering.

Pain and suffering damages encompass non-economic losses, such as:

  • Emotional distress (e.g., anxiety, depression, PTSD)
  • Loss of enjoyment of life
  • Insomnia, nightmares, or other psychological effects
  • Physical discomfort and ongoing medical issues

These damages are often calculated using the “multiplier method.” In this approach, the total economic damages (e.g., medical bills and lost wages) are multiplied by a number between 1.5 and 5, depending on the severity of the pain and suffering. For example, if economic damages total $50,000 and the multiplier is 3, the pain and suffering damages would equal $150,000.

Attorneys at Malman Law understand the complexity of proving pain and suffering damages and work diligently to present compelling evidence to maximize their clients’ compensation.

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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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by President and Founder, Steven J. Malman who has more than 20 years of legal experience as a personal injury attorney.

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