In personal injury and liability claims, one of the most important pieces of information a claimant or their attorney can obtain is the policy limit of the at-fault party’s insurance coverage. Whether the case involves a car accident, premises liability, or another form of negligence.

Understanding the available insurance coverage is essential for shaping negotiations and determining a realistic settlement strategy. This process, known as policy limit verification, can often determine how a claim proceeds and whether a fair resolution can be reached without the need for prolonged litigation.

Why Policy Limits Matter

Insurance policies serve as the primary source of compensation in most personal injury claims. While a plaintiff may be entitled to damages well above the available insurance, the insurer is only responsible for paying up to the stated policy limit. Anything beyond that may require pursuing the defendant’s personal assets, which is usually difficult and impractical.

For example, if a victim’s damages total $500,000 but the negligent driver only carries a $100,000 liability policy, the insurer’s maximum exposure is capped at $100,000. Unless the defendant has substantial personal wealth, the plaintiff may realistically only recover the policy limit.

This makes it critical for attorneys to identify, verify, and evaluate insurance coverage early in the claims process. Without that knowledge, settlement negotiations can stall or operate on false assumptions, potentially harming the injured party’s ability to make informed decisions.

The Process of Policy Limit Verification

1. Initial Request for Disclosure

Policy limit verification, most states have laws or court rules that allow a claimant to request disclosure of insurance information. This usually requires the insurer to confirm whether coverage exists and, in some cases, to provide details such as policy limits, exclusions, and other applicable terms.

Attorneys typically begin by sending a formal request letter to the insurance company, citing the relevant statute or rule. The goal is to obtain a written confirmation of the applicable policy limits and any umbrella or excess coverage.

2. Evaluating the Response

Sometimes, insurers voluntarily disclose policy limits, particularly in clear liability cases with serious damages. In other situations, they may resist, providing only partial information. If disclosure is incomplete or ambiguous, the attorney may need to file a motion to compel in litigation or pursue discovery methods to obtain the information.

3. Checking for Multiple Policies

A common pitfall is assuming only one policy applies. In reality, multiple layers of coverage may exist:

Primary liability coverage (auto, homeowners, or commercial general liability).

Umbrella or excess coverage, which can provide significantly higher limits.

Employer coverage if the defendant was acting within the scope of employment.

Additional insured endorsements extending coverage through other policies.

A thorough investigation ensures that no available source of recovery is overlooked.

4. Verification Beyond Disclosure

Simply receiving a letter from the insurer is not always enough. Attorneys often seek corroboration through:

Reviewing declarations pages and policy documents.

Conducting depositions of insurance representatives.

Utilizing subpoenas during litigation.

Checking court filings in unrelated cases where coverage may have been discussed.

This deeper level of verification reduces the risk of relying on inaccurate or incomplete information.

The Strategic Value of Policy Limit Verification

1. Guiding Settlement Demands

Knowing the limits allows attorneys to craft demands that are both realistic and persuasive. For example, if an injured client’s damages clearly exceed the policy limit, the attorney may issue a policy limits demand—an offer to settle for the full amount of available coverage. This puts pressure on the insurer to settle, since refusal could expose them to a bad faith claim if a jury later awards damages well beyond the policy limits.

2. Avoiding Over- or Undervaluation

Without verified policy limits, settlement discussions risk becoming skewed. Plaintiffs might accept an offer that seems fair but is actually far below the insurer’s maximum exposure. Conversely, they might hold out for more than is realistically available, wasting time and resources. Verification grounds the negotiation process in reality.

3. Setting Litigation Strategy

Policy limits shape the overall litigation approach. In cases with low coverage, plaintiffs may prioritize early settlement, recognizing the limited recovery potential. In cases with high limits or multiple layers of insurance, attorneys may pursue more aggressive discovery and trial preparation, knowing that significant damages are potentially collectible.

4. Preserving Bad Faith Claims

If an insurer unreasonably refuses to settle within policy limits, they may be liable for the full amount of a jury verdict—even if it exceeds the insured’s coverage. However, to preserve this argument, plaintiffs typically must first make a clear and timely demand within the policy limits. Verification ensures that such a demand is properly tailored and enforceable.

Common Challenges in Policy Limit Verification

Insurer Resistance

Some insurers resist disclosing policy limits, arguing that plaintiffs have no right to this information before litigation. While many jurisdictions have rules requiring disclosure, the scope of those rules varies. Attorneys must be prepared to push back and, if necessary, use formal discovery.

Multiple Defendants

In multi-defendant cases, untangling coverage can be complicated. Each defendant may have separate policies, some of which may overlap or exclude coverage depending on the circumstances. Coordination is critical to avoid missing available coverage.

Umbrella Policies with Conditions

Excess coverage often comes with conditions that make it less straightforward. For example, an umbrella policy may only apply once the primary coverage is fully exhausted, or it may contain exclusions for certain types of claims. Careful review is required to avoid overestimating the available coverage.

Confidentiality Concerns

In some cases, insurers disclose policy limits only under protective orders or confidentiality agreements. While this still allows the information to be used in settlement discussions, it may limit broader strategic use in litigation.

Best Practices for Attorneys

Request Early and in Writing – The sooner coverage information is obtained, the more effectively it can shape case strategy.

Know the Local Rules – Different states have different requirements for disclosure. Understanding these rules strengthens the request.

Look for Hidden Coverage – Explore whether umbrella policies, employer coverage, or additional insured endorsements might apply.

Document Everything – Keep thorough records of all requests, disclosures, and communications with the insurer. This documentation can be crucial if a bad-faith claim later arises.

Educate Clients – Ensure clients understand how policy limits affect settlement possibilities. Managing expectations prevents frustration and builds trust.

The Bigger Picture: Fairness and Efficiency

Policy limit verification is not just a technical step in the claims process—it is a mechanism that promotes fairness and efficiency. When both sides know the boundaries of available coverage, negotiations are more likely to succeed, reducing the need for costly litigation. Insurers benefit by limiting exposure to bad faith claims, and plaintiffs benefit by securing timely compensation that reflects the realities of the case.

Ultimately, verifying policy limits allows settlement discussions to move forward with transparency and clarity. It ensures that negotiations are not driven by guesswork but by concrete information about what resources are actually available.

Conclusion

In settlement negotiations, few factors are as decisive as the defendant’s insurance coverage. Policy limit verification provides the foundation for realistic expectations, strategic planning, and fair resolution. By confirming available coverage early and thoroughly, attorneys protect their clients, enhance negotiation leverage, and reduce the risk of unnecessary litigation.

For claimants, understanding policy limits can mean the difference between disappointment and a satisfactory recovery. For insurers, proper disclosure can help prevent costly bad faith claims. And for the justice system as a whole, transparency in this area fosters efficiency and trust.