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Insurance Settlements and Personal Injury Claims

Can You Still File a Lawsuit If You Receive an Insurance Payment?

Insurance Settlements and Personal Injury ClaimsIn the aftermath of a personal injury, you typically report the accident to your insurance company and seek coverage for your losses. Often, your insurer will delay or initially deny coverage, hoping you’ll agree to accept less than you should receive. Conversely, an insurer may offer you a quick settlement, also in an attempt to minimize their liability. If you accept a payout from your insurer, can you still pursue damages in a personal injury lawsuit if your losses exceed what the insurance company pays? That depends.

First, it’s important to understand that you cannot recover for the same loss twice. If your insurance company pays all your medical bills, you can’t file a lawsuit seeking reimbursement of those expenses from the party who caused the accident (though your insurance company may do that). In the American legal system, you can seek compensation only for “actual losses.” Once you’re paid for a particular loss, it is no longer considered an “actual” loss.

However, if you incur losses in a slip-and-fall, for example, that are not covered by your health insurance, you are not precluded from seeking compensation for those losses directly from the at-fault party. For instance, if your health insurance policy does not cover the costs of surgery, and your injuries require that, you can seek damages from the defendant to pay for those expenses.

With automobile accidents, if your losses exceed the limits of the at-fault party’s insurance policy, you can accept payout of the full amount of their policy and file suit against your insurer to recover the additional losses, as long as you have underinsured motorist coverage that exceeds the at-fault party’s coverage. For example, assume you have $500,000 worth of losses. If the at-fault driver has only $50,000 worth of coverage, and you have $500,000 of underinsured motorist coverage, you can accept $50,000 from the at-fault party’s insurer and file suit against your insurer to recover the additional $450,000.

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