What Happens When a Car Accident Claim Exceeds Insurance Limits?

When a Virginia car accident claim is worth more than the at-fault driver’s insurance limit, the liability insurer generally does not automatically pay the difference. The insurer’s obligation is ordinarily limited by the applicable policy, but the injured person may have other potential sources of recovery.

Those sources may include:

• Underinsured motorist coverage
• Another applicable liability policy
• Commercial, employer, rideshare or umbrella insurance
• Medical-expense or income-loss benefits
• Collision coverage for vehicle damage
• Another legally responsible person or business
• The at-fault defendant’s personal assets, when collection is practical

The value of the injury claim and the amount of insurance available are separate questions. A claim can be worth more than the insurance limit even when there is no practical way to collect the entire amount.

A Norfolk car accident lawyer can review the available policies, potentially responsible parties, injuries, financial losses and collection options before a release is signed.

What Is an Automobile Insurance Policy Limit?

A policy limit is the maximum amount an insurer has agreed to pay for a particular type of covered claim, subject to the policy’s terms and applicable law.

Automobile liability policies commonly contain separate limits for:

• Bodily injury to one person
• Bodily injury to everyone injured in one accident
• Damage to another person’s property

A policy written with limits of 50/100/25 generally provides:

• $50,000 per person: The maximum bodily-injury liability coverage available to one injured person.
• $100,000 per accident: The maximum bodily-injury liability coverage shared among all injured people in one accident.
• $25,000 for property damage: The maximum liability coverage for covered damage to other people’s property.

The per-person limit remains subject to the per-accident limit. For example, several seriously injured people may each have claims exceeding $50,000, but they may still need to share one $100,000 per-accident limit.

What Are Virginia’s Current Minimum Liability Limits?

Under Virginia Code § 46.2-472, motor vehicle policies effective on or after January 1, 2025 generally must provide at least:

Coverage category	Minimum limit
Bodily injury or death to one person	$50,000
Bodily injury or death to two or more people in one accident	$100,000
Property damage in one accident	$25,000

These are minimum limits. Drivers, businesses and vehicle owners may purchase higher primary limits or separate excess and umbrella coverage.

A policy limit is not an automatic payment. The claimant must still establish liability, medical causation and recoverable damages.

What Does It Mean When a Claim Exceeds Policy Limits?

A claim exceeds the available policy limit when the supported value of the claimant’s legally recoverable damages is greater than the amount of applicable insurance available for that claim.

For example, a person may have:

• $90,000 in past medical expenses
• Expected future treatment
• Substantial lost income
• A permanent impairment
• Pain and disruption to daily life

If the at-fault driver has only $50,000 in per-person bodily-injury coverage, the claim may exceed that driver’s liability limit.

This does not mean that the liability insurer must pay more than $50,000. It means that additional policies, liable parties or collection sources should be investigated.

What Usually Happens When Damages Exceed the At-Fault Driver’s Limit?

1. The liability insurer evaluates the claim

The insurer may investigate:

• Who caused the collision
• Whether the claimant contributed to it
• Whether the accident caused the claimed injuries
• Whether the treatment was necessary and related
• The amount of past and future losses
• Whether another policy or exclusion applies

The insurer may deny the claim, make an offer below the limit or agree to tender the available limit.

2. The insurer may offer its policy limit

A policy-limits offer normally means that the insurer is offering the maximum amount available under the applicable coverage for that claimant.

Before accepting, determine:

• Whether the amount truly represents every available liability limit
• Whether an excess or umbrella policy exists
• Whether another insured or policy applies
• Whether UIM coverage is available
• Which people, companies and claims the release covers
• Whether the proposed settlement complies with Virginia’s UIM procedures

3. The claimant may pursue applicable UIM coverage

If the available liability coverage is insufficient, underinsured motorist coverage may apply. UIM is generally a first-party benefit available through an insurance policy under which the injured person qualifies as an insured.

4. Other responsible parties may be investigated

The collision may involve another driver, vehicle owner, employer, business or product defect. Each potential claim requires evidence establishing a legal basis for liability.

5. A lawsuit may establish damages beyond the policy limit

A court judgment may exceed the defendant’s available insurance. However, an excess judgment does not automatically require the insurer to pay the entire amount.

The practical ability to collect the difference depends on other insurance, the defendant’s assets and income, legal exemptions and other circumstances.

Potential Sources of Recovery Above One Policy Limit

Potential source	What it may cover	Important limitation
At-fault driver’s liability coverage	Legally recoverable bodily injury and property damages	Payment is limited by the policy and supported claim value.
Underinsured motorist coverage	Damages caused by an underinsured driver	Eligibility, limits, elections and policy priority must be reviewed.
Excess or umbrella liability policy	Covered liability above an underlying policy	The policy must apply to the defendant, vehicle and accident.
Employer or commercial policy	Covered accidents involving an employee or commercial operation	The driver’s work status and scope of duties may be disputed.
Rideshare or delivery coverage	Covered platform-related driving activity	Coverage depends on the driver’s platform status and policy terms.
Another negligent driver	That driver’s share of legally recoverable damages	Virginia’s contributory-negligence rules remain relevant.
Medical-expense benefits	Qualifying medical expenses	Benefits must have been purchased and are subject to their own limits.
Income-loss benefits	Limited qualifying lost-income benefits	Coverage is optional and subject to statutory and policy restrictions.
Collision coverage	Repair or replacement of the insured vehicle	It does not compensate pain, disability or other bodily-injury damages.
Defendant’s assets	An unpaid portion of a judgment	Collection may be costly, slow or impractical.

How Does Underinsured Motorist Coverage Work in Virginia?

Virginia Code § 38.2-2206 requires Virginia motor vehicle policies to include uninsured motorist coverage and corresponding underinsured motorist protection, subject to statutory elections and exceptions.

A vehicle is underinsured when the liability coverage available for payment is less than the claimant’s damages, up to the UIM coverage available to the injured person.

UIM is different from liability coverage

Your own liability coverage generally protects you when you become legally responsible for another person’s injuries or property damage.

UIM coverage protects an insured when another driver is legally responsible but does not have sufficient liability insurance.

Virginia’s current add-on UIM rule

Under current Virginia law, UIM coverage is generally payable without subtracting the at-fault driver’s available liability coverage.

However, a named insured may sign an election permitting the insurer to reduce UIM payments by the liability coverage available for payment. That election binds the insureds under the policy.

The declarations, endorsements and signed elections must be reviewed to determine which method applies.

Example without a reduction election

Assume:

• Supported damages are $140,000.
• The at-fault driver has $50,000 in liability coverage.
• The injured person has $100,000 in applicable UIM coverage.

When the policy provides add-on UIM and no reduction election applies, the UIM coverage may potentially be available in addition to the liability payment, subject to the damages proved, policy terms and all applicable defences.

The claimant cannot recover more than the legally recoverable damages merely because the combined policy limits are higher.

Example with a reduction election

If the policy contains a valid election reducing UIM payments by liability coverage available for payment, the available liability payment may reduce the amount payable under the UIM policy.

Do not calculate UIM benefits without examining the policy and any signed election.

Can More Than One UIM Policy Apply?

Potentially. Virginia law establishes a priority for applicable uninsured and underinsured motorist policies.

The general order is:

1. The policy covering the vehicle occupied by the injured person
2. A policy covering another vehicle under which the injured person is a named insured
3. A policy covering another vehicle under which the person is an insured but not a named insured

When several policies fall within the same priority level, their responsibilities may be apportioned according to their available coverages.

Potential policies to review include:

• The policy covering the vehicle occupied during the crash
• The injured person’s own vehicle policies
• Policies issued to a resident spouse or qualifying household relative
• Commercial or employer policies
• Other policies under which the claimant may qualify as an insured

Not every household or vehicle policy will apply. Policy definitions and Virginia’s statutory priorities control.

Can You Accept the Liability Limit and Still Pursue UIM Benefits?

Virginia provides a procedure allowing an injured person to accept the available liability limits, release the underinsured driver and liability insurer, and continue pursuing applicable UIM benefits.

Under Virginia Code § 38.2-2206, a qualifying settlement:

• Is made for the liability insurer’s available coverage limits
• Includes the liability insurer and its insured
• Uses a written release consistent with the statute
• Does not prejudice an otherwise valid UIM claim
• May require the released driver to cooperate with the UIM insurer

The statute also provides that a qualifying release does not release other parties merely because overly broad language appears in the document.

Nevertheless, a claimant should not assume that any standard release automatically satisfies the statute. The settlement documents, UIM notices and pending lawsuit must be handled correctly.

What Happens to the Lawsuit After a Policy-Limits UIM Settlement?

When the liability limits are paid through Virginia’s statutory procedure, the liability insurer may no longer have a duty to defend the released driver.

If the injured person continues a lawsuit to establish UIM damages:

• The action proceeds against the released defendant by name.
• The UIM insurer must be served as required by Virginia law.
• A resulting judgment against the released defendant may be entered under the statutory designation.
• The judgment is enforceable against the UIM insurer only up to the applicable UIM limits.

This procedure is technical. It should not be attempted based solely on a verbal assurance that UIM coverage will remain available.

What if Several People Are Injured?

The per-accident limit may need to be divided among multiple claimants.

For example, a policy with 50/100 bodily-injury limits provides no more than:

• $50,000 to any one injured person; and
• $100,000 total for all bodily-injury claims arising from the accident.

If three people each sustain damages exceeding $50,000, the combined liability coverage ordinarily remains limited to $100,000.

The insurer may attempt to negotiate a division of the available coverage. If the claimants cannot agree, litigation or another allocation procedure may be required.

Other claim payments arising from the same occurrence may also reduce the liability coverage considered “available for payment” when evaluating UIM status.

Can Another Liability Policy Apply?

Do not assume the driver’s personal automobile policy is the only source of liability coverage.

Vehicle-owner coverage

The policy covering the involved vehicle may apply to a person driving with the owner’s express or implied permission, subject to policy terms and exclusions.

Employer or commercial coverage

If the driver was performing work-related duties, an employer or business policy may require review.

Evidence may include:

• Employment records
• Delivery or dispatch information
• Timesheets
• Business communications
• Vehicle-ownership documents
• Commercial insurance records

Rideshare coverage

A rideshare policy may apply when a driver was logged into or using a transportation-network-company platform. The available limit may depend on whether the driver was waiting for a request, travelling to pick up a passenger or completing an accepted ride.

Excess or umbrella coverage

A defendant may have an umbrella or excess policy that applies after the underlying automobile liability limit is exhausted.

An excess policy does not automatically include UIM coverage, and it may contain separate exclusions, notice requirements and limits.

Another negligent driver

More than one driver may have contributed to a multi-vehicle collision. Each potential defendant’s conduct and insurance should be investigated separately.

Vehicle or component defects

A defective tire, brake, steering component, restraint system or other product may create a separate claim when evidence establishes a legally actionable defect and causation.

Preserve the vehicle and allegedly defective component before repair or disposal when a product issue may be involved.

Can You Sue the At-Fault Driver Personally?

Yes. A claimant may file a lawsuit against an at-fault driver even when the claimed damages exceed the driver’s insurance limit.

A lawsuit may establish:

• Whether the driver was negligent
• Whether the claimant was contributorily negligent
• Whether the collision caused the claimed injuries
• The amount of legally recoverable damages

A judgment may exceed the policy limit. However, the liability insurer generally remains responsible only up to the applicable coverage limit.

Can the excess judgment be collected from the driver?

Potentially, but the practical result depends on:

• The defendant’s income
• Real estate and other assets
• Existing debts and liens
• Ownership of assets with another person
• Applicable state and federal exemptions
• Bankruptcy risks
• The cost and duration of collection proceedings

A large judgment does not guarantee that the unpaid amount can be collected.

Before rejecting a policy-limits settlement in order to pursue personal assets, investigate whether the defendant has meaningful nonexempt assets or income.

Does the Insurance Company Ever Pay More Than Its Limit?

The ordinary contractual obligation of a liability insurer is limited by its policy. An excess judgment does not, by itself, increase the stated coverage limit.

Questions involving an insurer’s claim handling, settlement duties, coverage conduct or potential liability beyond the stated limit are highly fact-specific. They should not be assumed merely because:

• The claim was worth more than the limit.
• The insurer declined one settlement demand.
• A jury returned an excess verdict.
• The claimant believes negotiations took too long.

Any issue involving alleged bad-faith handling requires careful analysis of the demands, evidence, timing, coverage, communications and duties owed under Virginia law.

Can Medical-Expense Benefits Help?

Virginia insurers must make optional medical-expense and income-loss benefits available when requested and purchased.

Medical-expense benefits may pay qualifying medical costs regardless of who caused the collision, subject to:

• The purchased limit
• Covered-person definitions
• The treatment period
• Policy terms
• Assignment-of-benefits rules

Under Virginia Code § 38.2-2201, the statutory minimum benefit offered is generally $2,000 per person for qualifying expenses incurred within three years, although an insured may purchase a different limit.

Income-loss benefits may provide limited weekly benefits when purchased and when the statutory conditions are met.

These benefits do not increase the at-fault driver’s liability limit. They are separate first-party benefits.

Can Collision or Comprehensive Coverage Help?

Collision coverage

Collision coverage may pay to repair or replace the insured vehicle after a covered collision, subject to the deductible and policy terms.

It does not compensate:

• Physical pain
• Medical expenses
• Lost wages
• Permanent impairment
• Other bodily-injury losses

Comprehensive coverage

Comprehensive coverage generally addresses covered non-collision losses such as theft, vandalism, weather, fire or animal impacts.

It normally does not apply to an ordinary collision with another motor vehicle.

Health insurance

Health insurance may pay covered medical expenses while the liability or UIM claim is pending. The plan may later assert reimbursement or subrogation rights against a settlement or judgment.

Medical bills and reimbursement claims should be reviewed before settlement proceeds are distributed.

How Is a Claim’s Full Value Evaluated?

Policy limits should not be confused with the value of the claimant’s damages.

A claim evaluation may consider:

Past medical expenses

This may include emergency treatment, hospital care, surgery, medication, therapy and other reasonable accident-related healthcare costs.

Future medical care

Future treatment should be supported by appropriate medical evidence concerning the type, frequency and duration of anticipated care.

Lost income

Evidence may include pay statements, employer records, tax returns, medical restrictions and self-employment documents.

Reduced earning capacity

A permanent injury may affect the ability to perform the same work, earn the same income or maintain the same career path.

Pain and changes to daily life

The evaluation may consider physical pain, inconvenience, loss of mobility, emotional distress, permanent impairment and reduced participation in normal activities.

Property damage

Vehicle repair, total-loss value, towing, storage, rental expenses and damaged personal property may be addressed separately from bodily-injury coverage.

A claim must be supported by evidence. The mere fact that damages are alleged to exceed the policy limit does not require the insurer to tender the limit.

How Does Contributory Negligence Affect an Excess-Limits Claim?

Virginia follows the contributory-negligence doctrine in ordinary negligence actions.

A defendant may argue that the claimant’s own negligence proximately contributed to the collision and prevents recovery.

Potential allegations may include that the claimant:

• Was speeding
• Failed to maintain a proper lookout
• Made an unsafe lane change
• Followed too closely
• Ignored a traffic signal
• Was distracted or impaired

An insurer’s allegation is not proof. Police reports, photographs, video, witness accounts, vehicle damage and other evidence may be necessary to determine fault.

UIM coverage also requires the claimant to establish that they are legally entitled to recover damages from the underinsured driver.

What Evidence Can Help Identify Additional Coverage?

Potentially useful evidence includes:

• The at-fault driver’s insurance card
• The vehicle owner’s policy
• Insurance declarations and endorsements
• Umbrella or excess policy information
• Employment and commercial-use records
• Rideshare or delivery-platform records
• Vehicle rental or leasing agreements
• Company ownership documents
• The claimant’s own automobile policies
• Policies issued to qualifying household members
• Health, disability and medical-expense benefit documents

A declarations page alone may not reveal every applicable exclusion, election or endorsement. The complete policy may need to be obtained and reviewed.

What Should You Do Before Accepting a Policy-Limits Offer?

1. Confirm the applicable limit. Obtain written verification of the available per-person and per-accident limits.
2. Ask about other policies. Determine whether excess, umbrella, commercial, employer or vehicle-owner coverage exists.
3. Review your UIM coverage. Obtain all applicable declarations, policies, endorsements and signed elections.
4. Identify other claimants. Determine whether the per-accident limit is being divided.
5. Evaluate future losses. Consider future treatment, disability and reduced earning capacity.
6. Review liens and reimbursement claims. Determine how medical and benefit obligations affect the net recovery.
7. Read the release. Identify every person, company and claim being released.
8. Preserve UIM rights. Make sure the settlement complies with Virginia’s statutory procedure.
9. Track the filing deadline. Do not allow negotiations to cause a late lawsuit.

How Long Do You Have to File a Virginia Car Accident Lawsuit?

Under Virginia Code § 8.01-243:

• A personal-injury action generally must be filed within two years after the claim accrues.
• A property-damage action generally must be filed within five years after the claim accrues.

Different deadlines, exceptions or notice requirements may apply when a claim involves:

• A minor or incapacitated person
• A death caused by the collision
• A state or local government defendant
• An unknown or hit-and-run driver
• Another special statutory circumstance

Insurance negotiations and policy-limits discussions do not necessarily extend the filing deadline.

If an action is filed against an uninsured or underinsured driver and the claimant intends to rely on UIM coverage, Virginia law generally requires service of the lawsuit on the UIM insurer as though it were a party defendant.

Read more about Virginia’s statute of limitations.

When Should You Consider Legal Advice?

Legal review may be particularly useful when:

• The injuries are serious or permanent.
• The claimed damages clearly exceed one policy limit.
• Several people were injured.
• The insurer offers its limit in exchange for a release.
• UIM coverage may apply.
• Several household or vehicle policies exist.
• An employer, rideshare company or commercial vehicle is involved.
• An umbrella or excess policy may exist.
• The defendant may have collectible assets.
• The insurer disputes fault or medical causation.
• The filing deadline is approaching.

A lawyer may investigate the policies, preserve evidence, identify responsible parties, evaluate damages and structure a liability settlement without unnecessarily prejudicing an applicable UIM claim.

Hiring an attorney does not guarantee that insurance or assets exist above the known limit, that a UIM claim will be approved or that the full claim value can be collected.

Frequently Asked Questions

What happens if my medical bills exceed the at-fault driver’s insurance?

The liability insurer generally pays no more than its applicable limit. Potential additional sources may include UIM coverage, medical-expense benefits, health insurance, another liability policy or another responsible defendant.

Does the insurer automatically pay the policy limit when damages are higher?

No. The insurer may still investigate liability, contributory negligence, medical causation and the value of the damages.

Can a settlement be more than the at-fault driver’s policy limit?

Potentially, when another policy, responsible party, UIM coverage or collectible asset is available. One liability insurer does not ordinarily pay beyond its limit merely because the overall settlement is larger.

Can I sue the driver for the amount above the insurance limit?

Yes. A judgment may exceed the policy limit, but collection of the unpaid amount depends on the defendant’s nonexempt assets, income and financial circumstances.

Will the insurance company pay an excess judgment?

Not automatically. The insurer’s ordinary contractual obligation is limited by the policy. Questions involving claim-handling duties or potential extra-contractual liability are fact-specific.

Is UIM coverage mandatory in Virginia?

Virginia automobile policies generally include uninsured and underinsured motorist protection, subject to statutory elections and exceptions. The UIM limits, endorsements and signed elections should be reviewed.

Does UIM simply pay the difference between two limits?

Not always. Current Virginia law generally provides add-on UIM benefits unless a named insured elected to reduce UIM payments by the liability coverage available for payment.

Can multiple UIM policies apply?

Potentially. Virginia law establishes a priority among the occupied-vehicle policy, policies under which the injured person is a named insured and policies under which the person qualifies as another type of insured.

Can I accept the at-fault driver’s policy limit without losing UIM?

Virginia provides a statutory procedure for accepting available liability limits and releasing the driver without prejudicing an applicable UIM claim. The settlement and release should comply with that procedure.

What if several people must share the per-accident limit?

The available limit may be allocated among several claims. Other claim payments may also reduce the liability coverage considered available when determining UIM benefits.

Does collision coverage pay for my injuries?

No. Collision coverage generally addresses damage to the insured vehicle. It does not compensate bodily-injury losses such as pain, medical treatment or lost income.

Can comprehensive insurance pay after a two-car collision?

Comprehensive coverage generally applies to non-collision losses. Ordinary vehicle-to-vehicle damage is usually addressed through collision or liability coverage.

Do I have to finish treatment before accepting a policy-limits offer?

Not necessarily, but settling before the diagnosis, prognosis and future losses are reasonably understood may create significant risk. A signed release may end the claim permanently.

Does hiring a lawyer guarantee compensation above the policy limit?

No. Legal representation may help identify policies, parties and assets, but it cannot create insurance coverage or guarantee that an excess amount is collectible.

Discuss an Excess-Limits Claim With Atkinson Law

A policy limit may restrict the amount one insurer will pay, but it does not necessarily identify every potential source of recovery.

Atkinson Law can review the at-fault driver’s coverage, the claimant’s UIM policies, possible excess insurance, additional responsible parties, medical documentation and evidence concerning fault.

You may also review Atkinson Law’s past case results. Prior results do not guarantee or predict the outcome of another matter.

Contact Atkinson Law to request a free, no-obligation consultation about a Virginia car accident claim that may exceed the available insurance limits.

This page provides general legal and insurance information. It does not guarantee coverage, compensation, collection or a particular result. Insurance policies, endorsements, elections and legal deadlines may apply differently depending on the circumstances. Reading this page or contacting the firm does not create an attorney-client relationship.