What Happens When Your Medical Bills Exceed The At-Fault Driver's 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.

PIP also pays less than its headline number suggests. Florida Statute 627.736(1)(a) pays 80 percent of reasonable and medically necessary expenses, and only if you get initial care within 14 days of the crash. The full $10,000 is available only where a physician, dentist, physician assistant or advanced practice registered nurse determines you had an emergency medical condition. Without that determination the limit drops to $2,500.

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. It matters more in Florida than in most states, because Florida requires no bodily injury liability coverage from most drivers at all. A driver can be fully legal on the road with nothing available to pay your medical bills, and UM/UIM is the only coverage that answers that.

Florida also allows uninsured motorist stacking, which combines the UM limits on more than one vehicle. Florida Statute 627.4132 bans stacking for liability and PIP coverage but expressly exempts UM coverage in subsection (1), which is why stacked UM exists here at all. Under Florida Statute 627.727(8), an insurer can sell nonstacked UM instead, but only on a form the named insured signs and at a premium at least 20 percent lower. If you own two cars with $50,000 in UM on each and never signed that form, you have $100,000 available.

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 homestead exemption is the largest obstacle to collecting an excess judgment. Article X, section 4 of the Florida Constitution protects an at-fault party's primary residence from forced sale by a judgment creditor, within acreage limits, no matter how far the judgment exceeds their policy. The Florida Bar's consumer guide to the homestead exemption covers how it works. Many retirement accounts and annuities are protected from creditors as well, which narrows the pool of reachable assets further.

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. In Fridman v. Safeco Insurance Co. of Illinois, decided by the Florida Supreme Court in 2016, the insured's UM limit was $50,000 and the jury returned a verdict of $1,000,000, leaving $950,000 above the policy limit for the bad faith action to reach.

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. Every strategy above takes time you may not have. Investigating bad faith and running asset discovery both depend on moving early, and waiting even a few weeks can cost you the evidence they rest on.

For any cause of action accruing on or after March 24, 2023, Florida Statute 95.11(5)(a) gives a negligence claim two years from accrual, down from four. The same reform brought in modified comparative negligence: under Florida Statute 768.81(6), a claimant found more than 50 percent at fault recovers nothing, and below that the award is cut by their share of fault.

Two years is not long in a catastrophic case, because the treatment that establishes your damages can still be running when the deadline arrives. Once it passes you are barred, however severe the injuries and however clear the other driver's fault.

What Has to Happen Before a Bad Faith Claim Can Be Filed

A bad faith claim has conditions attached, and they are set out in Florida Statute 624.155.

For a statutory action, s. 624.155(3)(a) requires 60 days' written notice to the Department of Financial Services and to the insurer on the department's civil remedy notice form. Under s. 624.155(3)(c), no action lies if the insurer pays the damages or corrects the problem within 60 days of receiving that notice, so the notice is as much a last chance for the insurer as it is a step for the claimant.

A separate 90-day rule applies to liability claims, including common law bad faith. Under s. 624.155(4)(a), no bad faith action lies at all if the insurer tenders the lesser of the policy limits or the amount demanded within 90 days of receiving actual notice of a claim supported by sufficient evidence. Section 624.155(5)(a) also states that mere negligence alone is not enough to constitute bad faith.

Timing matters for a further reason: a bad faith action does not accrue until the underlying claim against the insured has been resolved, so the sequence is the underlying case first and the bad faith case second.

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's practice is limited to personal injury and criminal defense, and we handle claims that run past the at-fault driver's policy limits. 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.