When someone is injured due to another person’s negligence, whether in a car accident, slip-and-fall, or workplace incident, one of the first steps in pursuing a personal injury claim is determining the amount of insurance coverage available. This process is known as policy limit verification, and it plays a central role in shaping the outcome of the claim.
Many injury victims and even some attorneys underestimate the importance of confirming how much coverage the at-fault party has. Without this verification, settlement negotiations can be skewed, expectations may become unrealistic, and victims risk walking away with less than they deserve. In some cases, a failure to verify policy limits can even jeopardize the entire claim.
This article explores why policy limit verification matters, the challenges associated with it, and how it impacts both claimants and insurers in the personal injury landscape.
Understanding Policy Limits
Every liability insurance policy comes with a “policy limit,” which is the maximum amount the insurer will pay for a covered claim. For example, if a driver has an auto insurance policy with a bodily injury liability limit of $50,000 per person, that is the most the insurer will pay to cover medical expenses, lost wages, pain and suffering, and other damages for a single injured party.
Policy limits vary widely depending on the type of policy, the state’s minimum coverage requirements, and whether the insured purchased additional protection. For instance:
Auto Insurance: Many states have minimum bodily injury liability coverage amounts such as $25,000/$50,000, though higher limits are available.
Homeowner’s or Renter’s Insurance: These often include liability coverage for injuries occurring on the property, with limits that might range from $100,000 to $500,000 or more.
Commercial Liability Policies: Businesses typically carry larger policies, sometimes with millions of dollars in coverage.
Understanding these limits is essential in personal injury cases because they define the upper boundary of what an insurance company will pay.
Why Policy Limit Verification Is Critical
1. Establishing Realistic Settlement Expectations
One of the main reasons policy limit verification matters is that it sets the ceiling for negotiations. If an injured person suffers $250,000 worth of damages, but the at-fault driver only has $50,000 in liability coverage, no amount of aggressive negotiation will force the insurer to pay more than that limit.
Without early verification, claimants may expect compensation that is simply not available. Knowing the limit early allows attorneys and clients to manage expectations, evaluate the likelihood of pursuing additional sources of recovery, and avoid wasted time or resources.
2. Identifying Potential Underinsured Scenarios
Policy limit verification also highlights when an at-fault party is underinsured. If damages far exceed the available coverage, the claimant may need to explore:
Underinsured Motorist Coverage (UIM): If the injured person carries UIM on their own auto policy, it can help bridge the gap.
Personal Assets of the Defendant: In rare cases, it may be worthwhile to pursue the defendant’s personal assets if they have significant wealth.
Third-Party Liability: Other entities, such as employers, contractors, or product manufacturers, may share responsibility.
Verification, therefore, acts as a checkpoint to determine whether the claimant should look beyond the initial insurer for adequate compensation.
3. Preventing Bad Faith Insurance Practices
Insurance companies are legally obligated to act in good faith when handling claims. If policy limits are clearly insufficient and the insurer unreasonably refuses to settle within those limits, they may expose themselves to a bad faith lawsuit.
For example, suppose an injured party offers to settle for the $50,000 policy limit, but the insurer delays or refuses without justification. If the case goes to trial and results in a $200,000 verdict, the insurer could be held liable for the entire amount—even though the policy limit was much lower.
By verifying limits and documenting settlement offers, claimants strengthen their position and hold insurers accountable to act fairly.
4. Influencing Litigation Strategy
The amount of available coverage often shapes whether a case settles quickly or proceeds to trial. For instance:
Low Policy Limits: If coverage is minimal compared to damages, attorneys may recommend settling quickly for the policy limits and then pursuing additional recovery options.
High Policy Limits: If substantial coverage exists, the case may warrant thorough investigation, expert testimony, and trial preparation to ensure full compensation.
In short, limit verification is not just about numbers—it directly affects the legal strategy.
5. Saving Time and Resources
Litigation is expensive and time-consuming. By verifying policy limits early, attorneys can avoid spending unnecessary resources on cases where recovery is capped at a low amount. This allows both lawyers and clients to make informed decisions about whether pursuing litigation is worthwhile.
Challenges in Policy Limit Verification
While the importance of policy limits is clear, obtaining that information can be challenging. Insurers are not always forthcoming, and in some states, they are not legally required to disclose policy limits before a lawsuit is filed. This creates a frustrating scenario for injury victims trying to make decisions about their claims.
Common challenges include:
Insurer Non-Disclosure: Some insurers refuse to share limits until compelled by litigation.
Multiple Defendants or Policies: In accidents involving several parties, verifying all applicable policies can be complex.
Umbrella Policies: A defendant may have additional umbrella or excess coverage that is not immediately apparent.
Attorneys often rely on demand letters, discovery requests, or even court orders to uncover the full extent of coverage. In jurisdictions where disclosure is mandatory, this process is simpler, but in others, it can be a drawn-out battle.
The Legal Landscape of Policy Limit Disclosure
The laws surrounding policy limit disclosure vary widely from state to state:
Mandatory Disclosure States: Some states require insurers to disclose policy limits upon written request from a claimant or attorney.
Conditional Disclosure States: In certain jurisdictions, insurers must disclose limits only after a lawsuit is filed.
No Disclosure Requirement: In other states, insurers can withhold policy limit information unless a court orders them to release it.
Due to this patchwork legal framework, attorneys must be knowledgeable about local rules and be aggressive in pursuing disclosure when necessary.
The Role of Attorneys in Policy Verification
For injury victims, navigating insurance companies and state-specific disclosure laws can be a daunting task. This is why hiring an experienced personal injury attorney is invaluable. Attorneys play a key role in:
Drafting formal written requests for policy information.
Using discovery tools such as interrogatories and subpoenas to compel disclosure.
Investigating whether umbrella or excess coverage exists.
Advising clients on whether settlement offers are reasonable in light of policy limits.
A skilled attorney knows how to leverage policy limit information strategically—whether that means pushing for a quick settlement, pursuing additional coverage, or preparing for litigation.
Conclusion
Policy limit verification is not just a bureaucratic step in the personal injury claims process—it is a cornerstone of case strategy, negotiation, and recovery. By confirming how much insurance coverage is available, injury victims and their attorneys can set realistic expectations, protect themselves against bad faith practices, and ensure that no potential avenues for compensation are overlooked.
While the process can be challenging due to insurer reluctance or varying state laws, it remains essential to securing justice for injured individuals. Whether the case involves a modest auto policy or a multi-million-dollar commercial liability policy, the principle remains the same: you cannot effectively pursue a claim without first knowing the limits of available coverage.