A policy limits offer sounds like the best you can get, and sometimes it is. But accepting one the wrong way can cost you coverage you paid for. The order of steps matters.
What it means
Every liability policy has a maximum for bodily injury, such as $25,000 per person. When the insurer offers that amount, it is saying it will pay everything the policy can pay. It does not mean your claim is worth that much. Your damages may be below the limit or far above it.
Compare the offer with your damages
- Add up medical bills to date and the cost of care you still need.
- Add lost income and other out-of-pocket costs.
- Estimate non-economic harm with your lawyer or another reliable guide.
- Subtract any health insurance, Medicare or Medicaid reimbursement claims to see the net.
If damages exceed the limit
You may have other sources: underinsured motorist coverage on your own policy, coverage on a resident relative's policy, the employer of a driver who was working, an owner who lent the car, or a business that served alcohol to a visibly intoxicated driver in states with those laws. A lawyer can check each. The at-fault driver's personal assets can also be reached in some cases, though collecting is often hard.
Your own insurer's consent
Many underinsured motorist policies require you to tell your insurer about the offer and get its written consent before you settle with the other driver. If you sign a release without that step, the insurer may refuse to pay your underinsured claim because the release destroyed its right to recover from the at-fault driver. The usual fix is to notify your insurer in writing first, and let it either approve the settlement or pay you the amount of the offer and preserve its own rights.
Get the policy information confirmed
Ask the insurer for a written statement that the limit is the full amount available, and whether any other policies cover the driver. Some states allow a sworn declaration from the driver about other coverage and assets. This step matters because a driver who hid a second policy has made the release you sign much more costly to you.
Before you sign
- Check how the release is worded and who it protects.
- Ask whether liens have been paid or negotiated.
- Confirm your treatment is complete or that you have counted future care.
- Keep copies of every letter.
- Talk to a lawyer if the damages are large. Many injury lawyers give free consultations and are paid from the recovery.
A hypothetical timeline
An injured driver gets a $25,000 limits offer on day 60 with a 30-day deadline. Her medical bills are already near $40,000, and she has underinsured motorist coverage on her own policy. The sensible order is to notify her insurer in writing that an offer exists, ask for written consent to settle and preserve its rights, confirm there are no other policies on the driver, resolve liens, and only then sign. If she signs first and her insurer later objects, she could lose the underinsured benefit she paid for.
Asking for more time
Insurers often put a short deadline on a limits offer. If you need time to confirm other coverage or get your own insurer's consent, ask for an extension in writing and explain why. Most will agree to a reasonable request. If a deadline is real and close, a lawyer can often handle the coordination quickly.
Frequently asked questions
What if the offer is the policy limit but my damages are bigger?
Look for other coverage, including your own underinsured motorist policy, before signing.
Can my insurer block the settlement?
Some policies require consent first, so notify your insurer in writing before you sign.
Does the offer mean my claim is worth that amount?
No, it only means that is the most the policy pays.
Can I sue the driver for more?
Yes, but collecting beyond insurance depends on the driver's assets.
How long does the offer stay open?
Insurers often set a deadline, so ask for it in writing.