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Why is My Policy Limit Less Than My Car Accident Settlement?

Steven Matz
December 16, 2022 | Car Accident, Verdicts & Settlements

In 2019, the governor of Michigan passed reforms to Michigan’s no-fault insurance laws. The bill was designed to offer consumers more options when purchasing insurance coverage. Consumers could now choose lower levels of personal injury protection in exchange for lower premiums. The downside of the law is that drivers in Michigan are more likely to encounter a situation where their injuries exceed the selected policy limit. When that happens, you can count on a dedicated Michigan car accident attorney at Matz Injury Law to fight for your rights.

What Levels of Personal Injury Protection Can Michigan Drivers Purchase?

Man sitting down signing a contract

The levels of insurance protection you choose will depend on various factors, including particular needs and available budget. Michigan drivers, in particular, can choose from six options for personal injury protection, or PIP insurance, under their auto insurance. These options include the following amounts for payout per person, per accident.

1. Unlimited coverage
2. Coverage up to $500,000 per injured person
3. Coverage up to $250,000 per injured person
4. Coverage up to $250,000 with a personal injury protection medical exclusion(s):

Such exclusions include:

  • You have other health insurance coverage for injuries sustained in a car accident, and it is not Medicare.
  • Members of your household carry health insurance covering injuries in a car or truck accident.

5. Coverage up to $50,000 per injured person, which is available for those enrolled in Medicaid, who have other members of their household with some other type of auto insurance policy, personal health insurance, or also have Medicaid.

6. Personal injury protection (PIP) medical opt-out for those with Medicare Parts A and B: Any other members of the household must carry a car insurance policy or personal health insurance to cover motor vehicle accident injuries.

If the policyholder fails to specify one of the above coverage options, the insurance company will go with the default, which is unlimited coverage.

What Happens If My Injuries Exceed My Personal Injury Protection Limit?

If the cost for your auto accident injuries exceeds the personal injury protection limit of your own insurance policy, the at-fault driver’s bodily injury and property damage liability (BI/PD) coverage kicks in automatically. This insurance coverage will cover the amounts exceeding your PIP limit and up to the amount covered under that policy.

However, BI/PD policies can vary depending on when they were issued. Insurance issued after July 2020 will include higher default bodily injury and property damage coverage limits.

In addition, drivers can purchase additional liability coverage under Michigan’s new law for added protection should they be responsible for an accident involving injuries or even deaths.

However, if your injury expenses exceed the liability coverage limit, the at-fault party may be personally responsible for fully covering your injuries. This can be problematic if they are unable to pay.

When Can I Sue the At-Fault Driver for Damages in Michigan?

Elderly woman using a walker

If you require additional compensation for your injuries, you can sue the at-fault driver for damages in Michigan under certain circumstances. These circumstances include when there is no-fault medical coverage, and your medical expenses exceed your policy’s coverage level.

Your lawsuit against the at-fault driver will be for excess medical care benefits, and potentially more, including compensation for pain and suffering, past or future medical bills, wage loss, future economic loss, and repair costs up to $3,000 for your car or truck.

Pain and suffering is a non-economic damage. Michigan has a threshold injury requirement to sue for such non-economic damages. The threshold test is that the injured party must experience serious impairment of a body function before being able to sue for damages.

Such impairment must first satisfy the following requirements to qualify:

  • The impairment is visible or perceivable due to displayed conditions or symptoms.
  • The impairment is of a function of the body that is valuable or significant to the injured individual.
  • There is an effect on the injured individual’s general ability to lead a normal life.

Showing you meet these three requirements can sometimes be challenging. An experienced car accident lawyer can conduct a thorough case evaluation and help compile the necessary evidence.

How Often Do Motor Vehicle Accident Settlements Exceed Insurance Limits in Michigan?

When it comes to how often settlements exceed policy limits, the answer is it is rare but not impossible. Sometimes a jury returns a trial verdict that is higher than the policy limits of the at-fault defendant.

Before the trial, the driver’s insurance company may offer a low settlement amount and hope you will accept. While going to trial is time-consuming and stressful, sometimes it will be your best option to obtain a higher settlement amount.

Before accepting any insurance settlement offer for a motor vehicle accident, seek the legal advice of an experienced personal injury attorney.

What Happens When an Auto Accident Claim Exceeds Policy Limits?

A lawsuit is the next step when a Michigan car accident injury claim exceeds the insurance limits. Once at trial, the jury will not concern itself with the insurance policy limits. The focus will be on evaluating the facts of the case presented before them. As a result, you can be awarded damages beyond the at-fault driver’s policy coverage limits.

To start, the focus will be on the bodily injury liability limit of the at-fault driver’s insurance policy to pay for damages up to the selected amount. If damages exceed this amount, the at-fault driver may be personally liable for the remaining balance. If they cannot pay, there can be financial consequences, which may include:

  • The seizure of personal assets by law enforcement to obtain payment to satisfy the obligation not covered under the insurance policy
  • Placement of a judgment lien against the at-fault driver’s home, a real estate encumbrance that prevents the normal selling of the property with a clean title
  • Garnishment of wages
  • Suspension of driver’s license

If you find yourself with an injury claim exceeding insurance policy limits, consider consulting with a law firm that offers a free case review to determine your options and how to move forward to receive the maximum amount possible.

When Does Underinsured Motorist Coverage Apply in Michigan?

Another way to cover auto accident expenses exceeding policy limits is to look at uninsured motorist or underinsured motorist coverage (UIM). One purpose of this insurance coverage is to compensate accident victims for economic and non-economic damages when an insurance claim surpasses the at-fault driver’s liability insurance limits.

When Are Injuries Likely to Exceed Policy Limits?

Injured man in a wheelchair holding his forehead

Michigan accident victims can suffer a variety of injuries and need extensive care. Generally, the more serious an injury is, the more likely it will exceed the policy limits. You will need to consider your injuries when working toward a car accident settlement.

Some of the most severe and expensive injuries that can occur in an auto accident include the following.

Traumatic Brain Injuries

Traumatic brain injuries, or TBIs, involve some level of brain tissue damage and often result from a jolt, blow, or bump to the head during a car accident. Healing from such injuries is often complicated, and an accident victim may suffer long-term health consequences.

Back and Spine Injuries

Due to the force of impact experienced in many auto accidents, back and spine injuries may occur. These injuries can be mild or extremely severe, requiring extensive rehabilitation services and even long-term care. Seeking full benefits and compensation will be imperative, and the injured person may need the help of a Michigan spinal cord injury lawyer.

Severe Burns and Disfigurement

Car crashes often lead to burns that range in severity. Medical treatment for these burns may include anything from antibiotics and pain medications to undergoing skin graft surgeries. Burn injuries can also lead to disfigurement, which may or may not be treatable with plastic surgery.

Loss of Limbs

The loss of a limb is a terrifying injury and can be that of a finger, toe, arm, or leg. Such a traumatic amputation during a car accident can also be life-threatening if medical personnel does not administer treatment immediately. In some circumstances, they can reattach the limb. Otherwise, a prosthetic limb may be the only option.

Injuries Resulting in Death

Serious injuries sustained in a car accident can result in death. Fatalities change a family forever, and working with a Michigan auto accident attorney to file a wrongful death case may be the only way to avoid financial hardship.

Do Not Let Policy Limits Dictate Your Settlement

Following an accident in Michigan, do not let policy limits dictate your settlement. At Matz Injury Law, we have obtained seven-figure settlements for our clients. If your injuries in a car accident claim exceed policy limits, do not be afraid to fight for what you deserve. We can help you seek full compensation for your injuries. Call us at 1-866 -22Not33 today, or use the online contact form to schedule a free consultation with a personal injury attorney.

steven matz headshot

Written By Steven Matz

Founding Shareholder

Steven J. Matz is a founding shareholder of Matz Injury Law. The firm’s concentration is on personal injury litigation, with an emphasis on traumatic brain injury.

The maximum contingency fee permitted by law is actually 331/3%. Michigan court rules require that the attorney fee be computed on the net sum recovered after deducting all disbursements properly chargeable to the enforcement of the claim.

What does 22not33 mean, exactly?

We can charge 22% while virtually all other injury attorneys charge 331/3% because we are very, very, good at obtaining results for our clients.

We do not spend millions of dollars on television ads; instead, we offer a lower fee to all our clients. We do not have dozens of lower paid associates handling our work. All our clients are represented by Steven and Jared Matz. Steven Matz started the firm in 1977 and since then has dedicated his life to representing injury victims. Jared joined the firm in 2016 but grew up listening to stories, discussing theories, and generally learning at the dinner table about how to effectively and compassionately represent injury victims. Jared Matz was literally born to represent individuals involved in motor vehicle crashes.

All of our cases are handled on a contingency fee and all our cases are handled at 22%. Whether the case settles or goes through trial, the fee does not change. While our competitors make excuses as to why they charge so much, we are obtaining results for our clients at a lower fee.

At a typical television advertising law firm, your first call will be handled by a receptionist, who may refer you to an intake person, who will discuss your claim with an intake manager, who then discusses your claim with an associate, who may then report to a partner. You may never speak with the person whose name is at the top of the letterhead. At Matz Injury Law you will always speak with either Steven Matz or Jared Matz.