This question defines the true battle in serious injury law. You’ve been catastrophically injured. Your medical bills alone are $350,000. The driver who hit you has a $100,000 liability policy. The adjuster smiles and hands you the $100,000 check, saying, “This is the limit. That’s all the money there is.”
Your response, and the absolute truth: Yes, you can sue for more than the insurance limits. You must. The limit is only the ceiling of the insurer’s initial contractual obligation, not the limit of the defendant’s financial liability.
Succeeding in this requires one of the most aggressive, high-risk legal manoeuvres in the entire field of civil law: You must engineer a Bad Faith claim against the defendant’s own insurance company. You must force the insurer to make a catastrophic error, and then you sue them for the difference. The fight is not against the policyholder; the fight is against the insurance company’s balance sheet.
The Illusion of Finality: Breaking the Contract Barrier
The core of the strategy is simple: You must separate the defendant’s contract with their insurer from the defendant’s personal liability to you.
The Defendant’s Duty vs. The Insurer’s Contract
- The Defendant’s Liability: When the at-fault driver caused your $350,000 loss, they incurred a $350,000 debt to you. That debt is their personal liability—it has no cap.
- The Insurer’s Contract: The insurance policy simply promises to defend and indemnify the driver up to $100,000.
If a jury returns a $350,000 verdict, the insurer pays $100,000. The remaining $250,000 is the personal debt of the defendant.
The Strategy’s Pivot: Going After the Insurer’s Money
The problem is, most drivers with low limits are “judgment-proof.” They don’t have $250,000 in the bank. Suing them directly for the excess is often a waste of time. The smart move is to use that $250,000 personal debt as a weapon to force the insurance company to pay the full amount. This is the Bad Faith manoeuvre.
The Nuclear Option: Engineering the Bad Faith Claim
The insurer has one central, overriding duty: to protect its policyholder from an excess judgment. If they fail in that duty when they had a clear opportunity to succeed, they are liable for the entire verdict amount, not just the policy limit.
Step 1: The Time-Limited Demand (The Trap)
Your attorney sends the insurance company a letter—the most feared document in the industry—often called a policy limits demand or a time-limited demand.
- The Offer: You offer to settle the entire $350,000 claim for the full policy limit: $100,000.
- The Expiration: You give them a strict, short deadline. Thirty days. No extensions.
- The Warning: The letter explicitly warns the insurer: If you fail to accept this offer within the policy limits, you are wilfully exposing your client to a massive excess judgment, a breach of your fiduciary duty, and subsequent liability for Bad Faith.
Step 2: The Insurer’s Cynical Calculation
The insurer’s claims adjuster now faces a high-stakes, agonizing choice.
- Accept: Pay $100,000. Case closed. Liability ends. They lose money but avoid risk.
- Reject: Refuse to pay the $100,000. Hope that they win at trial, or that the jury gives a low verdict, or that you back down.
This refusal is often rooted in cynicism: the insurer assumes they can save money by delaying or by betting that a jury will be less sympathetic than their lawyers warn. This calculated risk is the Bad Faith mistake.
Step 3: The Excess Verdict and the Bad Faith Assignment
The insurer refuses the $100,000 offer. The case proceeds to trial. The jury, predictably, returns a $350,000 verdict.
The insurer pays their $100,000. The defendant now personally owes you $250,000.
The defendant is furious. Their life is ruined because their insurer refused to pay a cheap $100,000 to settle the case.
Your attorney then approaches the defendant and offers a deal:
- The Defendant Agrees: They assign their right to sue their insurance company for Bad Faith over to you (the injured party).
- You Agree: In exchange, you grant the defendant a Covenant Not to Execute, meaning you promise not to collect the $250,000 excess judgment from the defendant’s personal assets.
You have now legally stepped into the shoes of the wronged policyholder. You sue the insurance company for the entire $250,000, plus damages.
The Final Blow: Punitive Damages and the Balance Sheet
Once you have the right to sue the insurance company for Bad Faith, the recoverable damages are unlimited.
The Full Amount
You sue for the entire $250,000 excess judgment. That’s the money the insurer should have paid in the first place.
Emotional Distress
You sue for the emotional suffering and anxiety the defendant (now you, by assignment) experienced when the insurer recklessly left them personally liable for a quarter-million dollars.
The Punitive Weapon
This is the most terrifying element for the insurer. Punitive damages are not compensation; they are pure punishment. If your attorney can show that the insurance company’s refusal was based on internal memos showing they hoped to save money or deliberately delay the claim, the jury can award millions in punitive damages.
This exposure to unlimited punitive damages is why the Bad Faith claim is so powerful. The insurer knows the risk is no longer $100,000; the risk is losing $10 million in a public trial. That existential threat is why insurers will often agree to pay the full $350,000 value of the claim—even though their policy limit was only $100,000—just to make the Bad Faith suit disappear.
In conclusion, the policy limit is merely the insurer’s opening bid. You sue for more by obtaining an excess judgment against the policyholder and then forcing the insurer to pay the difference via a Bad Faith claim. It is the only way to ensure full recovery in a serious injury case.