The Link between Your Insurance Policy Limits And Your Personal Injury Settlement

Two factors determine a settlement’s size: The extent and nature of the victim’s injuries and the stated limits on the defendant’s insurance policy. The injuries play a small part in determining the settlement’s size; the policy limits play a much larger part in that determination.

Why do insurance companies place limits on the amount of money that will be paid for damages?

An insurance company is a business. It has to make a profit. It could not do that if it agreed to pay-in-full for all the damages that were sustained by a given policyholder. Insurance companies generally charge more for any policy that has higher limits, which means that the policyholder should receive a large reimbursement for his/her damages.

The limit refers to the amount of money that could be paid to the accident victim, if the policyholder were to become the defendant in a personal injury case. In a personal injury case, a defendant’s insurance company would never pay more than the maximum amount, the amount given as the policy’s limit.

Does a plaintiff benefit greatly, if the defendant has purchased a car insurance policy with a high limit?

In that case, the plaintiff would be able to receive a larger compensation, once the case had settled. Still, it could take longer than usual for the 2 sides to agree on a settlement, as per injury lawyer in Chatham.

However, when insurance adjusters see that a defendant’s policy has a high limit, they plan to work hard on cutting-down the size of the defendant’s payment to the plaintiff. The money for that same payment comes from the car insurance company.

Whenever an adjuster focuses on bringing down the size of the defendant’s payment, then that same adjuster takes the time to investigate every aspect of the victim’s claim. Adjusters look for any angle that might help them to challenge the demand that has been made by the victim.

If the victim had a previous injury, or were to suffer from a chronic condition, the adjuster would try to suggest that the victim’s compensation ought to be lower than the amount requested. Such efforts tend to prolong the length of any negotiated settlement.

Some adjusters pretend to have extensive medical or legal knowledge. Adjusters have been known to employ strategies such as this:

Claim that the victim should have been wearing a special safety device; or claim that the medical report does not support the victim’s allegations.

Adjusters would not waste their time on such strategies, if a defendant had purchased a policy with low limits. However, the case would be far different if the defendant’s policy had very high limits. That fact explains the link between an insurance policy’s limits and a claim’s outcome.