A serious car accident often generates medical bills that are astronomical, including emergency treatment, surgical procedures, and long-term rehabilitation. Unfortunately, these mounting expenses can quickly surpass the minimal insurance coverage held by the driver who caused the crash. This shortfall is especially common in Florida, where mandatory minimum liability requirements are notoriously low.
When the liable party’s insurance funds run out, victims face the daunting challenge of covering the remaining debt. Successfully navigating this complex financial gap requires exploring three primary legal strategies: pursuing your own Underinsured Motorist (UIM) coverage, seeking compensation directly from the at-fault driver’s personal assets, and investigating a potential bad-faith claim against the insurer. Keep reading to learn more about recovering compensation when your medical bills exceed policy limits.
The Florida Accident Reality: Why Low Policy Limits Leave Victims Exposed
Insurance policy limits define the maximum dollar amount an insurance company will pay out to settle a valid claim resulting from an accident. Once this limit is reached, the insurance company’s obligation ends, leaving the injured victim responsible for any further costs. Understanding these limits is the first step in assessing the difficulty of recovering full compensation after a catastrophic injury.
Florida law mandates that all registered vehicle owners carry a minimum of $10,000 in Personal Injury Protection (PIP) insurance and $10,000 in Property Damage Liability (PDL) insurance. Shockingly, Florida doesn't require Bodily Injury (BI) liability coverage for most drivers. BI coverage is the exact coverage designed to pay for another person's medical bills and pain and suffering.
Furthermore, even the required PIP coverage only pays 80 percent of necessary and reasonable medical expenses up to the $10,000 limit, meaning accident victims are responsible for the remaining 20 percent of costs even before exhausting their PIP benefits.
Strategy 1: Maximizing Your Recovery Through Personal Insurance
When the at-fault driver’s minimal policy limits are exhausted, the most practical and immediate line of defense is to turn to the victim’s own insurance coverage. This strategy relies on the specific, voluntary protections the victim purchased to safeguard themselves against drivers with inadequate coverage. The purpose of this type of coverage is to fill the financial gap left by the negligent driver’s insufficient policy.
Utilizing Your Uninsured/Underinsured Motorist (UM/UIM) Coverage
Uninsured/Underinsured Motorist, or UM/UIM, coverage is an optional policy designed specifically to pay for a victim's damages when the at-fault driver either has no insurance or insufficient insurance to cover the full loss. This coverage is particularly important in Florida, where more than one in five drivers is uninsured, making it the sixth-worst state for uninsured motorists. Purchasing UM/UIM protection protects you from the negligence of drivers who fail to adhere to basic financial responsibility.
A related and powerful option in Florida is uninsured motorist stacking, which significantly increases a policyholder's total available protection. Stacking allows a policyholder to combine the UM coverage limits from multiple vehicles listed on a single policy, or sometimes even from multiple separate policies. Florida is one of thirty-two states that allow policyholders to stack these limits. For example, if you own two cars and have a $50,000 UM limit on each, stacking allows you access to $100,000 in total UM coverage after an accident.
UM/UIM coverage is applied after the at-fault driver’s bodily injury policy limits have been completely paid out and exhausted. Essentially, your UIM coverage acts as a secondary layer of protection, paying the remaining portion of your damages up to your own policy limit. In addition to UIM, other personal insurance options, such as Medical Payments coverage (Med-Pay), may be available on your policy to help offset immediate medical expenses.
Strategy 2: Pursuing the At-Fault Driver's Personal Assets
When all available insurance policies, including the victim's own UIM coverage, have been exhausted, the next necessary legal step is to sue the at-fault driver directly. The goal of this lawsuit is to secure a court-ordered judgment for the full amount of damages the victim suffered. This process makes the at-fault driver personally responsible for the difference between the actual medical bills and the total amount paid by all applicable insurance policies.
Obtaining a Judgment for Full Damages
A personal injury lawsuit seeks compensation for the total value of all damages incurred, which includes medical bills, lost wages, future treatment costs, and compensation for pain and suffering. Importantly, this total monetary value isn't capped by the at-fault driver’s minimal policy limit. Once a court awards a sum higher than the total insurance payout, the at-fault driver becomes personally liable for the remaining amount, known as the excess judgment.
In some fortunate instances, the at-fault driver may possess a personal umbrella policy, which functions as an additional layer of liability protection. An umbrella policy typically kicks in to cover damages once the underlying standard auto policy limits are exhausted, shielding the driver’s personal assets. However, if no umbrella policy exists, the full weight of the excess judgment falls onto the individual driver’s personal wealth.
The Challenge of Collecting a Judgment Against Personal Assets
While obtaining a sizable judgment is a significant legal victory, the practical challenge lies in collecting that judgment from an individual. Most drivers who carry only minimum insurance limits often lack substantial non-exempt assets that can be easily seized to satisfy the debt. Pursuing a collection lawsuit against such a driver is a calculated risk, as the cost of litigation sometimes outweighs the eventual recovery.
Florida's strong homestead exemption law presents a major obstacle to collecting excess judgment in Florida. Under this law, a judgment creditor generally can't seize or place a lien on an at-fault party's primary residence to satisfy a judgment, even when the judgment exceeds their insurance policy limits. Furthermore, many retirement accounts and annuities are also protected from creditors under various state and federal exemptions, further limiting the pool of available assets.
To address these collection difficulties, a legal team will initiate the post-judgment discovery process, often called discovery of assets. After a judgment is entered against a defendant in Florida, the judgment creditor may require the debtor to complete a Fact Information Sheet within 45 days. This sheet compels the disclosure of all assets, liabilities, and personal financial information through depositions and subpoenas. The purpose is to find non-exempt assets, such as secondary bank accounts or investment properties, that can be legally garnished or liened to satisfy the excess judgment.
Strategy 3: Holding the Insurance Company Accountable for Bad Faith
When medical bills are high and a serious injury is apparent, an insurance company has a responsibility to handle the claim fairly and promptly. If they unreasonably refuse to settle a claim within their policy limits, thereby exposing their insured to an excess judgment and massive personal liability, the victim may pursue a bad-faith claim. This powerful legal tool provides a pathway to force the insurer, rather than the underinsured driver, to pay the entire judgment amount.
The Insurer's Fiduciary Duty to Settle
Under Florida law, an insurance company has a fiduciary duty to act in good faith toward its policyholder when handling third-party claims. This requires them to make an honest and diligent effort to settle a claim when circumstances strongly suggest that a high verdict against the policyholder is likely. They must act with due regard for the insured's interests, recognizing the severe financial risk the insured faces if the case goes to trial.
When an insurer breaches this duty by refusing a reasonable settlement offer that falls within the policy limits, it may be found to have acted in bad faith. This failure to protect their policyholder opens the insurer up to liability for the full amount of the excess judgment, not just the initial, low policy limit. For instance, in one Florida case, Fridman v. Safeco, a jury ultimately awarded the policyholder $1,000,000 in damages after the insurer unreasonably refused to pay the full $50,000 in UM coverage it owed.
How a Bad Faith Claim Recovers the Full Compensation
The path to recovering the full compensation through bad faith often involves a strategic legal maneuver between the victim and the at-fault driver. The injured victim and the at-fault driver may enter into a consent or stipulated judgment for an amount exceeding the policy limit. In exchange for this agreement, the at-fault driver essentially gives the injured victim permission to sue the insurance company on their behalf for failing to protect them from the excess judgment.
The successful bad-faith lawsuit is then filed by the injured victim, acting as the assignee of the driver's rights. The suit argues that the insurer acted improperly by failing to settle within the limits, causing the excess judgment to be entered against its insured. A victory in this bad-faith action forces the insurance company to pay the victim the entire excess judgment, offering the best chance at full financial recovery for catastrophic medical expenses.
Florida’s Shortened Two-Year Statute of Limitations
One of the most critical factors in any severe Florida car accident case is time. Successfully executing the strategies outlined above—such as investigating bad faith claims and conducting asset discovery—requires swift legal intervention. Waiting even a few weeks can severely jeopardize your ability to recover compensation.
As of March 24, 2023, Florida significantly reduced the statutory deadline for filing most personal injury lawsuits from four years to two years. Since liability is so critical, understanding Florida's new modified comparative negligence rules is also essential.
This new, shorter statute of limitations means accident victims must consult with an attorney immediately to preserve their right to seek compensation. If you miss this crucial two-year deadline, you'll be legally barred from pursuing any compensation, regardless of the severity of your injuries or the clear fault of the other driver.
Statute of Limitations for a Bad Faith Claim In Florida
In Florida, a bad-faith claim against an insurer is treated as a contract matter, so the statute of limitations is extended to 5 years from the date liability is determined. There are certain preconditions that must be met, though, such as giving the insurer 60 days' notice with a 90-day cure period to settle before filing suit.
There have also been recent reforms to the standard that make pure negligence insufficient. It now requires a final judgment on the initial claim before the bad faith action accrues.
Speak To A Personal Injury Lawyer About Your Claim
When catastrophic medical bills exceed the negligent driver's policy limits, securing your full financial recovery requires sophisticated legal strategies. Successfully navigating this gap requires strategically leveraging UM/UIM stacking options, carefully assessing the viability of pursuing personal assets, and aggressively investigating the potential for a bad-faith claim against the insurer.
Weinstein Legal Team is a top-rated Florida law firm that specializes in maximizing settlements for our clients. We understand the pressure of mounting debt and fight tirelessly to ensure that negligent drivers and uncooperative insurance companies are held fully accountable.
Call us at 888-626-1108 to speak to an attorney now, or click here to schedule a free case review with an attorney today.
