Skip to content

Policy Limit Demand in a Personal Injury Case Explained

Michael Agruss

Written and Reviewed by Michael Agruss

  • Managing Partner and Personal Injury Lawyer at Mike Agruss Law.
  • Over 20 years of experience in Personal Injury.
  • Over 8000+ consumer rights cases settled.
  • Graduated from the University of Illinois Chicago School of Law: Juris Doctor, 2004.

When an individual files a personal injury lawsuit, a common strategy used is to make a policy limit demand. This approach is deployed to trigger a settlement negotiation by requesting compensation that is equal to the maximum amount available under the defendant’s insurance policy. The demand is typically made after the plaintiff’s attorney, like a Chicago personal injury lawyer from Mike Agruss Law, who has evaluated the case and determined that the injuries and damages exceed the policy limits.

Understanding the intricacies of a policy limit demand is crucial for any stakeholder involved in a personal injury case. It involves knowing the value of the claim, the policy’s limit, and the insurer’s obligations. Insurers are often held to a good faith requirement to settle within policy limits to protect their insured from an excess judgment that exceeds those limits. Failure to comply can lead to additional litigation against the insurance company by the insured for bad faith.

In negotiations, the demand serves as a critical tool that informs the insurer of the seriousness of the injuries and the plaintiff’s willingness to go to trial if necessary. Our lawyers rely on evidence such as medical records, expert testimony, and loss of income calculations to justify their policy limit demands. For the defendant, the aim is to resolve the claim within the insurance policy’s limits to avoid personal liability, while for the plaintiff, the goal is to receive fair compensation for the sustained injuries.

Personal Injury Law Book With Judges Hammer

Understanding Policy Limits in Personal Injury Cases

When navigating a personal injury claim, comprehending the policy limits of the insurance coverage involved is fundamental. These limits are the maximum amount the insurance policy will pay for a particular loss or claim.

Basics of Insurance Policy Limits

Insurance policy limits are predetermined amounts outlined within an insurance policy, signifying the maximum payout an insurance company will provide for a covered claim. These limits are critical in determining the potential compensation available to an individual who sustains personal injuries in scenarios like auto accidents or premises liability incidents.

Personal injury cases often hinge on the limits set by the defendant’s insurance policy. For example, if a person is injured and the at-fault party holds a policy with a limit of $50,000 for personal injuries, then $50,000 is the maximum the insurer will pay out for that claim. It is important to note that these limits do not dictate the total value of the injured party’s damages but simply cap what the insurance will cover.

Role of Insurance Coverage in Injury Claims

Insurance coverage is pivotal in personal injury claims as it is typically the main source of recovery for the injured party. The type and extent of coverage dictate the relief an injured party can realistically anticipate:

  • Liability insurance covers damages that the insured party is responsible for causing to others.
  • Uninsured/Underinsured motorist coverage provides compensation if the at-fault party lacks sufficient coverage.

In the case of personal injury, the claimant seeks compensation from the at-fault party’s insurer, up to the policy limit. Assessing the insurance coverage early on enables the injured party’s attorney to navigate the claim strategically, ensuring no policy benefits are overlooked.

The Demand Letter Process

In the context of personal injury cases, the demand letter process is a critical step where an injured party requests a certain amount in compensation from the insurance company of the party at fault. Crafting a meticulous demand letter and including key settlement components can significantly impact the outcome of a claim.

Crafting a Policy Limit Demand Letter

When initiating a policy limit demand, an attorney represents their client’s case to the insurance company by clearly outlining the severity of the injuries, the impact on the client’s life, and the justification for the policy limit demand. The letter must be factual and supported by relevant documentation, which is essential for conveying the seriousness of the demand and setting the stage for possible settlement negotiations.

Documentation may include:

  • Medical records and bills
  • Proof of lost wages
  • Photos of injuries
  • Statements from eyewitnesses

Key Components of a Settlement Demand

A settlement demand letter should contain several critical elements to be effective. These components serve to establish the facts of the case, assert the policy limits, and make a reasonable settlement demand that reflects the injuries and damages sustained.

Essential elements of a settlement demand letter include:

Identification of Involved Parties:

  • Insured party
  • Insurance company

Factual Summary of the Accident:

  • Date and location
  • Events leading to the injury

Injuries and Medical Treatment:

  • Nature and extent of injuries
  • Medical and rehabilitation treatments

Financial Impact:

  • Detailed listing of medical expenses
  • Loss of earnings

Non-Economic Damages:

  • Pain and suffering
  • Emotional distress

Policy Limits Information:

  • Statement of policy limits
  • Demand for policy limits in settlement

Ultimatum and Time Frame for Response:

  • Specified date for insurance company’s response

Demands, such as “The injured party seeks the policy limit of $100,000 for the bodily injury caused by your insured’s negligence”, underscore the specificity of the request. Meanwhile, attaching a comprehensive list of exhibits supports the listed injuries and financial losses, and provides a clear basis for the policy limits demand.

By systematically presenting these details, the attorney sets forth a strong, clear, and precise demand for compensation, addressing all areas necessary to support the reasonableness of the settlement demand. This approach lays the foundation for achieving a fair resolution for their client.

Negotiating with Insurance Companies

Negotiating with insurance companies is a critical step in seeking adequate compensation for personal injury claims. An Aurora personal injury lawyer must astutely approach the negotiation process, particularly when making a policy limits demand, to maximize their client’s settlement.

Strategies for Engaging the Insurance Carrier

When an attorney engages with an insurance carrier, they should start with a well-documented demand letter. This letter should include:

Factual Evidence: Medical reports, accident scene photos, and witness statements.

Financial Documentation: Bills, income loss statements, and repair estimates.

An attorney from our law firm will clearly illustrate how the policy limits are justified based on the claimant’s losses and the available coverage. They must anticipate counterarguments and prepare to address them forthrightly. Regular, persistent communication is crucial to keeping negotiations active and compelling the insurance company to respond.

Dealing with Response or Refusal

Upon receiving a response to the policy limits demand, the insurance company may:

  1. Accept the Demand: Agree to pay the policy limits.
  2. Counteroffer: Propose a settlement for less than the demanded amount.
  3. Refuse: Decline the demand and potentially refute liability or damages.

Should the insurance company refuse the demand, the attorney must assess the reason behind the refusal and counter with additional evidence or legal argumentation. If the refusal is based on a questionable interpretation of the policy or facts, the attorney might need to emphasize the risk of bad faith litigation against the insurer. The objective is to move the negotiation forward and enhance the chances of reaching an agreement congruent with the policy limits.

Legal Considerations and Action

In a personal injury claim, the action hinges on legal principles like establishing probable liability and navigating the nuances of state laws like those in Illinois regarding bad faith claims.

Establishing Probable Liability

The person pursuing a personal injury claim must demonstrate that the defendant had a duty to the plaintiff, breached that duty, and caused damages as a result. Probable liability exists when evidence sufficiently indicates that the defendant’s actions are more likely than not to have caused the injury. Evidence may include:

  • Eyewitness testimony
  • Accident reports
  • Medical records
  • Expert testimony

These pieces of evidence are crucial for persuading insurance companies to offer settlements within applicable insurance policy limits.

Illinois Law and Bad Faith Claims

Under Illinois law, insurance companies have an obligation not to engage in bad faith practices. A bad faith claim arises when an insurer unreasonably refuses to pay a claim or perform its contractual duties. Key aspects of Illinois law concerning bad faith include:

  1. Duty to Act in Good Faith: Insurers must handle claims with honesty and fairness.
  2. Consequences for Bad Faith: Insurers may face penalties, such as paying the claimant’s legal fees or damages beyond policy limits.

In Illinois, plaintiffs may seek the full amount of damages, potentially exceeding policy limits, if bad faith is involved in the handling of their personal injury claim.

Maximizing Your Settlement

In personal injury cases, such as those handled by Mike Agruss Law, securing the highest possible settlement is crucial. This often involves a deep understanding of the influencing factors and strategic law firm advocacy.

Factors Influencing Settlement Offers

Insurer’s Policy Limits: Insurers are bound by the policy limits when making settlement offers. Plaintiffs need to know the at-fault party’s policy limits to assess their settlement demand’s feasibility.

Severity of Injuries & Medical Bills: Settlements typically correlate with the severity of injuries and associated medical bills. Documented evidence of injuries and comprehensive records of related expenses can substantiate claims for higher compensation.

Comparative Negligence: In some jurisdictions, the concept of comparative negligence might reduce the settlement if the claimant is found partially responsible for the incident.

Capacity for Fair Dealing: The defendant’s insurer’s willingness to engage in fair dealing can influence settlement offers. If an insurer is found engaging in bad faith practices, punitive damages could be leveraged in negotiations.

Law Firm Advocacy and Settlement Optimization

Mike Agruss Law is instrumental in navigating the complexities of personal injury cases. An experienced Naperville injury lawyer from our team can effectively handle settlement negotiations and amass the necessary evidence to support a policy limits settlement demand.

Our legal experts can identify and counteract insurer tactics that constitute bad faith. Employing strategies to expose these tactics can sometimes result in more favorable settlement offers. Contact us today for more information.

Submitted Comments

No Comments submitted yet. Sharing your story will help others!

We are listening

We will respond to you at lightning speed. All of your information will be kept confidential.

Form successfully submitted!