When the At-Fault Driver's Insurance Limits Are Too Low: Underinsured Claims and Other Recovery Options

Many drivers carry only minimum liability insurance, which may not cover serious injuries. When damages exceed the other driver's limits, you have several possible sources of recovery, and the order and timing matter.

Possible sources of recovery

• The at-fault driver's liability limits.
• Your own underinsured motorist coverage, if you purchased it.
• Medical payments or personal injury protection coverage.
• Your health insurance, subject to reimbursement rights.
• Other responsible parties, such as an employer if the driver was working, or a vehicle owner.
• The at-fault driver's personal assets, if collectible.

Underinsured motorist coverage

Underinsured motorist coverage on your own policy pays the gap between the at-fault driver's limits and your damages, up to your coverage limits, though rules vary by state about how the coverage is calculated. Many policies require you to notify your insurer and get consent before accepting a settlement from the other driver, so do not sign a release until you check.

How the process often works

1. Gather evidence of damages, including medical records, bills and lost income.
2. Find out the at-fault driver's policy limits, which insurers may disclose in some states or through your lawyer.
3. Send a demand to the other insurer for the policy limits when damages clearly exceed them.
4. Notify your own insurer about a possible underinsured claim.
5. Get written consent from your insurer before accepting the limits and signing a release, if required.
6. Pursue the underinsured claim with your insurer.

Do not sign a release too early

A release of the at-fault driver can affect your underinsured claim and your insurer's subrogation rights. Policies often require advance notice and permission. A lawyer can help protect your rights.

Employers, owners and other parties

If the driver was working, the employer may be liable and have more insurance. A vehicle owner who lent the car, a bar that overserved the driver, or a company with a defective part may also share responsibility. Investigate all possible sources early.

Collecting from personal assets

A judgment against an at-fault driver with few assets may be hard to collect. Consider whether wages, bank accounts or property could be reached, and weigh the cost of collection. See our guide to collecting a judgment.

Check your own coverage now

Review your policy for uninsured and underinsured motorist coverage, medical payments and limits. Higher limits cost relatively little and can protect you against low-limit drivers.

Real-life scenarios

1. An injured driver collects the other driver's limits and then claims underinsured benefits from their own insurer.
2. A claimant discovers the at-fault driver was on the job and pursues the employer.
3. A driver increases uninsured motorist limits after reading policy options.

Common mistakes to avoid

• Signing a release without insurer consent.
• Not checking the other driver's limits.
• Not notifying your own insurer.
• Ignoring other responsible parties.
• Skipping medical care.
• Assuming minimum limits are enough.

Questions to ask a professional

• What are the at-fault driver's limits?
• Do I have underinsured coverage?
• Do I need insurer consent before settling?
• Are other parties responsible?
• Is the driver's personal assets collectible?

A practical action plan

1. Document damages.
2. Learn the other policy limits.
3. Notify your own insurer.
4. Get consent before accepting limits.
5. Pursue underinsured and other recoveries.

Terms you may hear

• Policy limits: the maximum an insurer will pay.
• Underinsured motorist coverage: coverage when the at-fault driver's limits are too low.
• Release: a document giving up claims.
• Subrogation: an insurer recovering what it paid from the at-fault party.
• Medical payments coverage: coverage for medical costs regardless of fault.

Frequently asked questions