What Happens If Medical Bills Exceed Policy Limits?

Overview: Car Accident Claims When Bills Exceed Policy Limits

A serious car accident can turn your life upside down in seconds. One moment you are commuting through Western Washington, and the next you are facing mounting medical bills, missed wages, and ongoing pain from car accident injuries.

For many injured people, the most stressful moment comes when they realize their medical expenses quickly exceed the at fault driver’s insurance policy limits. It is a common and frightening scenario.

This guide explains what happens if medical bills exceed policy limits, who may ultimately pay, and what options exist under Washington State law. It also outlines practical strategies to protect your financial health while your claim moves forward.

If you are facing severe injuries, brain trauma, or long term disability, you may also find it helpful to review resources from our Tacoma brain injury lawyer page.

Understanding Auto Insurance Policy Limits For Bodily Injury

Every auto insurance policy includes insurance policy limits. These limits define the maximum amount the insurance company will pay for bodily injury, property damage, and liability claims.

In Washington State, the minimum amount of liability limits required is $25,000 per person and $50,000 per accident for bodily injury, along with $10,000 for property damage, according to the Washington State Office of the Insurance Commissioner.

A per person limit is the maximum amount insurance pays for injuries to one injured party. A per accident limit is the maximum amount available for all injured people combined in a single accident.

If the at fault driver has a $100,000 per person limit and your medical bills total $170,000, the insurance company can only pay up to the limit. The difference becomes excess damages.

Insurance policies often include maximum coverage amounts known as policy limits. Once those insurance limits are exhausted, the insurance company has no contractual obligation to pay more.

Auto accident settlements based on a single insurance policy are highly unlikely to exceed policy limits because the insurer’s duty to pay stops at that maximum amount.

Why Medical Bills Often Exceed Policy Limits

It is not uncommon for medical bills exceed policy limits after a serious accident.

Severe injuries such as traumatic brain injuries, spinal cord damage, multiple fractures, or internal organ trauma can generate hundreds of thousands of dollars in medical expenses.

Emergency surgery, hospital stays, rehabilitation, and long term care quickly exceed modest auto insurance policy limits.

Multiple victim crashes also increase exposure. If several people are injured, the per accident limit may be divided among multiple parties, reducing what each person can recover.

Lost wages, future wages, and other damages such as pain and suffering add to the total value of a personal injury claim.

What Happens If Medical Bills Exceed Policy Limits

When damages exceed policy limits, the insurance company must pay only up to the limit outlined in the insurance policy.

After that, the at fault party becomes personally responsible for additional damages.

In theory, you may file a lawsuit and seek compensation from the at fault driver’s personal assets.

In practice, the ability to recover depends on whether the fault driver has meaningful personal property, savings, or income.

If the at fault driver lacks sufficient assets, collecting on an excess judgment can be difficult.

When The At Fault Driver Lacks Sufficient Assets

Many drivers carry only the minimum required insurance coverage.

If the responsible party is insolvent or has limited personal assets, recovering additional compensation beyond policy limits becomes challenging.

A personal injury attorney may investigate public records to assess property ownership, employment, or business interests.

Sometimes an umbrella policy or additional coverage exists that provides higher liability limits.

An umbrella policy can provide additional coverage beyond a standard auto insurance policy and may help cover excess damages.

Coverage Options When Bills Exceed Policy Limits

Fortunately, the at fault driver’s insurance is not always the only source of recovery.

Washington drivers often have access to underinsured motorist coverage, uninsured motorist coverage, or personal injury protection on their own insurance policy.

You may also have health insurance that helps pay immediate medical bills.

In some cases, multiple responsible parties share liability, expanding available insurance coverage.

Using Health Insurance For Immediate Medical Expenses

If the at fault driver’s insurance is insufficient, you can tap into your health insurance policy to help cover immediate medical expenses.

Health insurance often becomes the primary payer once liability coverage is exhausted.

Washington law protects patients from certain surprise billing practices. Since 2020, emergency services cannot be balance billed, even if provided by an out of network provider at an in network facility, under rules explained by the Washington State Office of the Insurance Commissioner.

As of January 1, 2025, balance billing is banned for emergency and non emergency ground ambulance transport in Washington State.

However, if you receive care from an out of network provider, you might still see balance billing for the difference between what insurance pays and the provider’s charge in non protected situations.

Hospitals in Washington are required to offer Charity Care to eligible patients. The Washington State Attorney General’s Office explains that eligibility is based on household income relative to the Federal Poverty Level.

Approximately half of Washingtonians may qualify for free or reduced cost hospital care based on income guidelines.

Apple Health, Washington’s Medicaid program administered through Washington Health Care Authority, may cover medical bills incurred up to three months before application if income eligibility is met.

Organizations such as the HealthWell Foundation and the Patient Advocate Foundation also provide financial assistance for qualifying medical costs.

Seattle providers often offer interest free monthly installment plans if patients communicate early with billing departments.

Unpaid balances may otherwise be sent to collections, negatively impacting credit scores.

Filing Underinsured Motorist Or PIP Claims

Underinsured motorist coverage can help bridge the gap when the at fault party’s insurance coverage is not enough.

An underinsured motorist claim is filed with your own insurance company.

Underinsured coverage pays the difference between the at fault driver’s liability limits and your total damages, up to your UIM limit.

Personal injury protection, also called PIP or MedPay, can pay medical expenses regardless of fault.

Personal injury protection can cover immediate medical bills and sometimes lost wages while the liability claim is pending.

Review your auto insurance policy carefully to understand your UIM limits and PIP benefits.

Seeking Other Liable Parties

If someone else’s negligence contributed to the accident, you may have grounds to pursue compensation from other liable parties.

For example, if the other driver was working at the time, their employer may share liability.

Defective vehicle components may create claims against manufacturers.

Poor road maintenance could implicate a government entity.

When multiple parties share fault, available insurance coverage increases, improving the chance to cover excess damages.

Suing To Recover Excess Damages

If bills exceed policy limits and no other coverage exists, filing a lawsuit may be necessary.

If you win in court and receive a verdict exceeding policy limits, the insurance pays only up to the maximum amount.

The remaining balance becomes a judgment against the at fault driver personally.

Collecting depends on whether the person has non exempt personal assets or income.

Washington’s statute of limitations for personal injury claims is three years from the date of the accident.

Negotiation Strategies When Damages Exceed Policy Limits

Early in the claim, your attorney may demand policy limits from the insurance company.

If liability is clear and injuries are serious, insurers sometimes tender limits to protect their insured from excess exposure.

Structured settlements may be explored in appropriate cases.

Negotiating with both the insurance company and the at fault driver can sometimes produce contributions beyond insurance limits.

In rare cases, a bad faith claim may arise if an insurance company unreasonably refuses to settle within policy limits and exposes its insured to excess liability.

Protecting Your Financial Health While Claims Are Pending

Keep detailed records of all medical bills, receipts, and insurance explanations of benefits.

Notify medical providers that a liability claim is pending.

Ask about payment plans or temporary holds to prevent collections.

Document lost wages, ongoing costs, and other damages.

Stay in close contact with your attorney to track developments and deadlines.

When To Contact An Experienced Personal Injury Attorney

If medical bills exceed policy limits, you should speak with an experienced personal injury attorney as soon as possible.

A knowledgeable personal injury attorney can investigate all sources of insurance coverage.

An attorney can gather evidence, consult experts, and help assess the compensation that may be available under Washington law.

Legal representation may help you better understand settlement offers and make informed decisions about your claim.

A personal injury attorney can also file a lawsuit if necessary and pursue compensation from multiple responsible parties.

What If You Are The At Fault Driver

If you are the at fault driver and damages exceed your liability limits, you may face personal exposure.

Your insurance company must defend you but only up to policy limits.

You may consider consulting an attorney to understand your options.

Increasing insurance coverage and purchasing umbrella coverage in the future can reduce risk.

Practical Checklist When Medical Bills Exceed Policy Limits

• Collect all medical records and bills.
• Notify both insurance companies promptly.
• Review your own insurance coverage for UIM and PIP benefits.
• Investigate other liable parties.
• Communicate with medical providers about payment arrangements.
• Consult an experienced personal injury attorney to explore all avenues to recover compensation.

Common Questions

Can you recover more than the insurance policy limits?

Yes, but typically only through other insurance coverage or personal assets of the at fault party.

What if my medical bills are more than my settlement?

Health insurance, underinsured motorist coverage, and negotiated reductions may help bridge the difference.

What happens if your insurance is maxed out?

Once insurance pays the maximum amount, remaining liability may fall on the responsible party personally.

Next Steps And Resources

If you are dealing with serious injuries and medical bills that exceed policy limits, do not assume you are out of options.

You may be able to recover through multiple sources, including your own insurance, third party claims, or umbrella coverage.

Washington law provides tools such as Charity Care and consumer protections against certain balance billing practices.

An experienced personal injury attorney can help evaluate your damages and assess the compensation that may be available under the law.

If you have questions about what happens when medical bills exceed policy limits after a car accident in Washington State, contact Brumley Law Firm at (833) 740-2275 to schedule a free consultation with a Washington-licensed personal injury attorney.