Suing Beyond Policy Limit Virginia 

When you’ve been hurt due to the negligence of another, bills can pile up fast. You’ve got doctor bills, hospital bills, and all your regular expenses. But you may not have your regular income if your injuries left you unable to work for any period of time. For some, even missing a few days or weeks of work can be a serious financial setback. If you miss paying your bills for even a month, you could face late fees and interest charges that add up quickly. Understandably, people often have questions about the amount they can sue for in a personal injury lawsuit in Virginia.

Typically, a lawsuit starts with the defendant’s insurance policy, if they have an applicable one. Usually this is the case with car accidents, or with personal injury cases involving corporate entities. For example, if you slip and fall and hurt your back at the grocery store, it’s likely they have an insurance policy that covers customers being injured in the store. So your attorney would probably start by asking the insurance company to cover things like your medical costs, your lost wages, and possibly pain and suffering. This is where questions about policy limits often arise.

What is a Policy Limits Settlement?

A policy limits settlement occurs when a case is settled within the limits of the insurance policy. For example, if the grocery store’s policy covers $50,000 in damages and you agree  to accept $50,000, you have received a policy limits settlement.

But what if you had a lot more damages than $50,000? What if you had to have expensive back surgery and then had to take months off of work to recover? Or, what if you are now permanently disabled and unable to work? What if you’re in constant pain and your doctors don’t believe it will ever go away? What if you continue to have bills for physical therapy, medication, and other treatments? In this case, it seems unfair to settle for $50,000 if your medical expenses and/or lost wages have exceeded that amount, or if they likely will in the future. If something like this happens, you and your attorney will probably have a conversation about suing beyond policy limits.

Of course, the first step is to find out the actual policy limits, which is often easier said than done. Frequently, insurance companies aren’t eager to reveal this number. Your attorney will do their best to find out what the limits are, but if the insurance carrier refuses to disclose this info, you can request it in the discovery process after you file a lawsuit. However, it is better to get the information beforehand if possible. 

How Can You Get the Insurance Carrier to Disclose Their Policy Limits?

The good news is that in Virginia, there are legal requirements for the insurance carrier to disclose in some situations. For example, under Virginia Code § 8.01-417, an insurance company covering motor vehicle accidents has to disclose their policy limits if the medical costs and/or lost wages are $12,500 or more. This is also true for slip-and-fall cases like the grocery store example above. Additionally, insurance policy limits are discoverable in car accidents where the defendant was charged with an alcohol-related crime, such as driving while intoxicated. (They do not have to be found guilty of this crime, only charged for it.)

In order to use this rule, the plaintiff needs to submit substantial paperwork stating the date the injury happened, the address where it happened (such as the address of the grocery store), the name of the property owner, and the plaintiff’s medical records, bills, and any documentation pertaining to lost wages. And remember, that’s just to find out what the policy limits are! Fortunately, your attorney will assist you with this part, and once the paperwork is submitted, the insurance carrier is required to respond within 30 days.

There are also laws applying to disclosing insurance policy limits in wrongful death cases. If the deceased died in a car accident or due to a homeowner’s negligence, policy limits must be disclosed with a written request. Similar to the rules in personal injury cases, your request should include the address of the party at fault, the date of injury, and an accident report if available. Again, the insurance carrier then has 30 days to disclose their policy limits to you.

If your attorney is able to obtain these limit numbers before filing a lawsuit, they can sometimes use that information to encourage the insurance carrier to settle at, or in some cases, even above the policy limits to avoid a bad faith claim.

Who Pays the Damages That Exceed the Policy Limits?

This is a complicated question. In most cases, the defendant—the person or entity responsible for the injury—is liable for damages exceeding their insurance policy’s limits. However, while you can sue the defendant for excess damages, this isn’t always the best solution.

Virginia has another law, Va. Code § 8.01-66.1, that covers “bad faith” claims for failure to settle within policy limits in Virginia. Essentially, if the insurance company acts in “bad faith” and refuses to settle a claim that should be covered, they can be liable for the amount of the claim, plus interest and reasonable attorney’s fees and court costs. Sometimes, a letter from your attorney threatening a bad faith claim can encourage the insurance company to do the right thing. 

Your lawyer may also point out that the insurance company has failed in their duty to protect the insured (the defendant) from liability, which is their legal duty under the law. Under Virginia law, insurance carriers have a duty to make a policy limits offer in a case that is likely to settle in excess of the policy limits. This is intended to protect the defendant from liability, which is the point of insurance. It would be hard for the insurance company to defend itself in a bad faith claim if the plaintiff was willing to settle within policy limits and the insurance company did not make an offer. If this doesn’t work, or if you and you attorney agree that you deserve more compensation than the policy limits allow, you can proceed to sue the insurance company.

However, there are some situations where the insurance company is within their rights to refuse to pay the claim. The Virginia Bureau of Insurance Regulations says that insurers must offer first party claimaints (the plaintiff) a fair and reasonable settlement in all claims where there is no dispute over coverage and liability. In many cases, the insurance company will claim an injury isn’t covered or they aren’t liable for various reasons. For example, in the hypothetical grocery store case, the store’s policy may say that injuries are only covered if the store took reasonable precautions like putting up a “wet floor” sign after mopping. If there was no “wet floor” sign when you slipped and fell, the insurance carrier may be well within their rights to refuse your claim. Your attorney will look over the policy specifications and if it appears the insurance company is correct, they may advise a lawsuit against the grocery store itself.

If your situation is covered by the insurance company’s policy and a “bad faith” claim isn’t applicable, you can still sue the defendant if damages exceed insurance limits in Virginia. Your attorney will probably consider the defendant’s ability to pay a judgment in this amount when discussing this option with you. In the grocery store example, the store could likely afford to pay the judgment if you win your case, especially if they are part of a large corporate chain. On the other hand, if it’s a small “mom and pop” grocery store that’s barely turning a profit, there might be a high likelihood that the store will go bankrupt if a large judgment is found against them. 

In some cases, your attorney may be able to find other solutions to collecting on a judgment. For example, they may ask a judge to garnish the defendant’s wages or place a lien on their property. But this will only work if the defendant has wages or property. However, if your lawyer can’t find an alternative way to collect on a judgment, they may advise against putting the time and money into a lawsuit against the defendant.

Are There Other Options?

Sometimes the insurance policy limits are insufficient to cover your damages. If the defendant can’t afford to pay the judgment and there are no additional ways to collect from them, you may be wondering if you’re out of luck. In some cases, there are other options.

One thing you and your attorney may discuss is the possibility of suing other defendants. In our grocery store example, let’s say that Mom and Pop’s Grocery is already in the red, and own no significant property. There really is no way to collect a judgment from them. But they might not be the only party responsible for your slip-and-fall accident in the store. Your attorney might ask you some questions like these:

• • What if Mom and Pop’s Grocery hired a third-party company to clean the floors, and the employees of that company failed to place “wet floor” signs? In this case, the cleaning company might also be liable. 
  • What if the wet floor wasn’t the only issue? If your slip was complicated by a loose tile, the tile company might be liable for producing a defective product.
  • What was the course of your medical treatment like? Is your pain better or worse now? If your back is still hurting despite surgery or other treatment, you might also consider whether your doctor made any mistakes that could be considered medical malpractice.
  • Were you visiting the grocery store for your own personal shopping or on behalf of an employer? Sometimes, when people are injured while performing a task for another person or entity, they may be covered under vicarious liability statutes. So if your boss sent you to the grocery store, on the clock, to pick up a cake they ordered for the company’s tenth anniversary party, you might be able to sue your employer under these statutes.

What About Umbrella Policies?

This is another common question. Umbrella policies are intended for situations where a defendant, typically a corporate entity, has multiple policies in place. The “umbrella” policy is meant to kick in if the defendant faces a claim that may exceed other policy limits. So if the grocery store carries a $100,000 liability policy and then has another umbrella policy for $200,000, the original liability policy will pay out the $100,000, and if the claim is worth more than that, then the umbrella policy will cover the rest up to $200,000. For anything beyond the $300,000, you would need to sue the grocery store.

Typically businesses have these policies, but in rare cases individuals, particularly wealthy ones, may have them too. One of the many tasks your Virginia personal injury lawyer will do for you is determining all applicable insurance policies in your case.

What Should You Do If You Have Concerns About Policy Limits or a Personal Injury Claim in Virginia?

It’s hard to figure out on your own how to sue beyond policy limits, or even what your case should be worth. It can be even more difficult to handle the many other aspects of a personal injury suit, especially while dealing with an injury. For this reason, contacting an experienced personal injury attorney in Virginia right away is very important. 

Don’t hesitate to learn more about your situation and the legal options available to you. First, you should collect any evidence that you believe relates to your injury, including things like accident reports, pictures of the scene, lists of witnesses, etc. Then piece together all your medical bills and/or cost estimates for treatment. Next, you should contact Lugar Law for a free consultation, so you can learn more about the options moving forward.