This process is known as policy limit discovery, and it can significantly influence how your case is handled, whether it settles quickly, and how much compensation you can realistically expect.
Understanding what policy limit discovery is, how it works, and why it matters can help you make better decisions and avoid surprises during the claims or litigation process.
What Is Policy Limit Discovery?
Policy limit discovery is the process of finding out the maximum amount an insurance company will pay on behalf of its insured for a particular claim. This amount is often referred to as the “policy limit” or “limits of liability”, and it is typically listed on the insurance policy’s declarations page.
These limits cap the amount the insurance carrier will pay, even if the claimant’s damages exceed that number. For example, if a driver has an auto liability policy with a bodily injury limit of $50,000 and causes an accident that results in $150,000 in damages, the insurer may only pay $50,000. Any additional compensation would have to come from the defendant personally—if at all.
Why Policy Limits Matter in a Personal Injury Case
Knowing the policy limits early in the process gives both claimants and attorneys vital information that shapes how the case proceeds. Here’s why it matters:
1. It Defines the Upper Bound of Your Recovery from Insurance
Most injury claims are paid out by the at-fault party’s insurance—not out of their own pocket. So even if your damages are high, your recovery may be limited by how much coverage they have. If a defendant only has $25,000 in liability coverage and no significant personal assets, that could be the most you’ll ever see.
2. It Influences Settlement Strategy
If your injuries are severe and the policy limit is low, an attorney might submit a policy limits demand early in the process to resolve the case quickly. On the other hand, if the policy has higher limits, more in-depth negotiation or litigation may be warranted.
3. It Helps Avoid Wasting Time and Resources
If the policy limit is too low to justify extended litigation, knowing that early can save time, legal expenses, and emotional energy. It also gives you a chance to look for other recovery sources (like umbrella policies or underinsured motorist coverage).
4. It Can Prevent Bad Faith by the Insurer
Insurers have a duty to act in good faith, which includes fairly evaluating and settling claims. If an insurer fails to disclose policy limits or refuses to settle when it’s clear they should, they could be liable for bad faith, opening them up to pay more than the actual policy limit.
How Policy Limit Discovery Works
Policy limit discovery typically occurs in one of two ways—pre-litigation (before a lawsuit is filed) or during the discovery phase of litigation.
1. Pre-Litigation Requests
In many states, attorneys can send a written request to the insurance company asking for policy limit information. This request often includes:
A demand letter outlining the facts of the case
A request for the insurance declarations page
A statement of applicable laws requiring disclosure
A time limit for response (usually 15–30 days)
Some states, like California, Florida, Illinois, and New York, require insurers to respond with policy information within a certain timeframe. Others may allow insurers to refuse unless a lawsuit has been filed.
2. Formal Discovery After Filing a Lawsuit
If an insurer refuses to disclose coverage information before litigation, or if state law doesn’t require it, you may need to file a lawsuit and use formal discovery tools to get the information. These include:
Interrogatories: Written questions that require answers under oath
Requests for Production: Asking the defendant to provide copies of insurance policies
Depositions: Sworn testimony where the defendant or insurer can be questioned about their coverage
In federal court and many state courts, rules of procedure (like Federal Rule of Civil Procedure 26(a)(1)(A)(iv)) require defendants to disclose the existence and limits of any insurance that may cover the claim.
What Information Can Be Requested?
When seeking policy information, the following details are usually requested:
The name of the insurance company
Policy number(s)
Types of coverage (e.g., bodily injury, property damage, umbrella)
Limits of liability per person and per occurrence
Whether there are any excess or umbrella policies
Whether any coverage is being disputed or denied
Can an Insurance Company Refuse to Disclose Policy Limits?
Yes—but only in some jurisdictions and only before litigation. Once a lawsuit is filed and discovery begins, most courts require insurers or defendants to provide this information if it’s relevant to the case.
However, if an insurer unjustifiably withholds this information when they’re legally required to disclose it, it could lead to legal consequences—especially if that refusal leads to a missed opportunity to settle within limits.
What If the Policy Limit Is Too Low to Cover Your Losses?
If the at-fault party’s insurance coverage isn’t enough to fully compensate you, here are some options:
1. Personal Assets
You may sue the defendant personally for the remainder, but collecting can be difficult unless they have significant assets.
2. Umbrella or Excess Insurance
Some defendants have umbrella or excess policies that provide additional coverage beyond standard limits. These are sometimes hidden or not disclosed unless specifically requested.
3. Underinsured Motorist (UIM) Coverage
If you’re injured in an auto accident and the at-fault driver’s insurance is inadequate, your own UIM coverage may help fill the gap.
Tips for Getting Policy Limit Information
Hire an attorney early: Personal injury lawyers know how to demand this information and recognize when it’s being withheld unfairly.
Send a formal, written request: Cite any applicable state laws requiring disclosure.
Include medical records and evidence of serious injury: This may encourage insurers to disclose limits voluntarily to avoid bad faith exposure.
Be ready to litigate: Sometimes a lawsuit is the only way to get the answers you need.
Conclusion
Policy limit discovery may sound like a technical legal process, but in reality, it’s one of the most strategic steps in any personal injury case. Knowing how much insurance coverage is available—and whether the insurer is disclosing it properly—can change the course of your case, affect your settlement strategy, and protect you from being undercompensated.
