Understanding Insurance Policy Limits Offers
One common term that sometimes arises during negotiations with insurance companies is the “policy limits offer.” Understanding what this entails is important.
What is a policy limits offer?
A policy limits offer is a settlement offer made by an insurance company that agrees to pay the maximum amount allowed under the at-fault party’s insurance policy. In other words, it represents the amount and available coverage for a particular claim under that policy.
Why Do Insurance Companies Make Policy Limits Offers?
Insurance companies make policy limits offers for several reasons:
- Limiting Exposure: By offering to pay the policy limits, the insurance company seeks to limit its exposure to further liability. Once the offer is accepted, the insurer is typically released from any further obligation to pay additional damages related to the claim.
- Avoiding Litigation Costs: Settling a claim within the policy limits can be more cost-effective for the insurance company than going to trial. By making a timely settlement offer, the insurer may avoid the expenses associated with prolonged litigation.
How to Handle Policy Limits Offers?
Evaluate the Offer
Carefully assess the policy limits offer in the context of their damages and the strength of the claim. Consideration should be given to the extent of the injuries, medical expenses, lost wages, and other relevant factors.
Negotiate Strategically
While a policy limits offer may represent the maximum available coverage, there may be other sources of recovery, such as underinsured motorist coverage or other liable parties. Sometimes the defendant themselves may have resources to pay.
Whether to accept or reject a policy limits offer is a decision that should be based on a thorough analysis of the case and consideration of the potential risks and benefits and sources of recovery.
Explore Alternatives:
If the policy limits offered are insufficient to fully compensate for the damages, you may explore alternative options, such as filing a lawsuit against the at-fault party or pursuing additional sources of compensation.
Policy limits offers are a common occurrence in insurance settlements, and understanding their implications is essential. By carefully evaluating these offers, negotiating strategically, and advocating tirelessly for their clients, an attorney can ensure that their clients receive the compensation they deserve for their injuries and losses.
If you have been injured in a motor vehicle accident at no fault of your own, give us a call today at 530-241-2734.
Mark Cibula is a third-generation attorney in Redding, California, a former mayor, and chairman of the Shasta County Board of Supervisors. He has practiced personal injury law for over 29 years and handled many complex matters, including jury trials. He has earned numerous awards, including the National Trial Lawyers Top 100. He has a B.A. from the University of California at Berkeley, an M.A. from the University of Southern California, and a J.D. from the McGeorge School of Law. Mark is also a long-distance open-water swimmer. His telephone number is 530-241-2734.
Diane Balma is a highly experienced personal injury attorney. Diane graduated from McGeorge School of Law in 1991 and has since been using her advocacy skills to improve the lives of others. Diane has obtained millions of dollars for her clients and is a skilled negotiator and litigator. Diane is also a breast cancer survivor. Diagnosed in 1995, she has been a national figure and effective advocate in the cancer arena for more than 25 years.
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