Legal Question in Insurance Law in California

Re: limit of liability

if you would like to email me your contact information today, we would be more than happy to give you a free case evaluation/consultation regarding the specific facts of your case.

Re: limit of liability

Your hypothetical person can be sued for any amount. The policy limit protects only the insurer, which cannot be required to pay more than that amount (except in cases involving the insurer's own bad-faith conduct). Your hypothetical person could be hit with a $2 million judgment and be forced to pay half while his insurer pays the other half, or he could be hit with a much larger judgment and driven into bankruptcy while the insurer pays the $1 million limit.

The amount of a judgment is typically determined by measuring the injury to the plaintiff rather than the assets of the defendant. If you cause a $10 million injury, you can get hit with a $10 million judgment regardless of your ability to pay or your level of insurance.

Punitive damages are determined by looking at several factors, one of which is the wealth of the defendant, so the defendant's resources aren't completely irrelevant. But most cases do not involve punitive damages, and those that do usually also involve general, compensatory and/or statutory damages.

If you're worried about a larger judgment, it's a good idea to buy more insurance -- and to do so *before* you give anyone cause to sue you (insurers don't pay if you wait until you've caused an injury before buying the policy).

Re: limit of liability

A person may be sued for an amount beyond the value of the insurance policy, depending on the value of the damages the injured party has suffered. Collecting against a judgment in excess of the policy could pose certain difficulties, however. If you're a potential defendant, it's important that your insurance correctly reflect the value of your assets, and be reviewed and updated periodically.

As for punitive damages, usually insurance companies are not liable for those.

Re: limit of liability

In your hypothetical scenario, you are assuming that all insurance will pay the $1 million, which may or may not be the case. Thus, if you get hit with a $500K judgment, and your insurer fails to pay all or part, then you are personally on the hook for the balance and/or full amount. Thanks for your question and good luck.