When someone gets seriously hurt by a defective product, the aftermath often brings confusion, financial stress, and uncertainty. What should have been a safe item, whether a car, tool, appliance, or medication, suddenly causes real harm. It gets even worse when the insurance policy behind the responsible party offers only minimal support. When product liability and low policy limits collide, injured parties may find themselves struggling to pay for basic needs like medical bills, property damage, or lost wages.
This guide helps you understand what to do when product liability and low policy limits collide, offering practical steps to protect your rights and pursue full compensation. We’ll explain how liability coverage works, what happens when insurance limits fall short, and what legal strategies are available when the costs of your injuries exceed the coverage offered. Whether you’re dealing with a defective car part or a dangerous consumer product, knowing your options can make all the difference in your recovery, both physical and financial.
Understanding Product Liability and Why It Matters
Product liability laws hold manufacturers, distributors, and retailers responsible when defective products cause injuries. These laws exist to protect consumers from unsafe items, such as faulty electronics, hazardous children’s toys, or defective car parts. If a product is unreasonably dangerous, courts may hold the at-fault party in the distribution chain legally liable.
However, proving product liability requires showing that the item was defective and that the defect caused your injuries. In many cases, multiple parties may share the blame. But even when you have a strong case, the problem arises when the responsible party has limited coverage limits under their liability insurance policy.
This is when coverage limitations begin to matter. You may file a demand letter and receive a settlement demand offer, only to realize the insurance company won’t pay more than the policy limits. If your injury compensation claim exceeds those limits, you could be left with a remaining balance that causes significant financial hardship.
The Insurance Company and Policy Limits Problem
In any personal injury case, the insurance company plays a major role. Their job is to evaluate your claim and pay damages up to the applicable policy limits. These limits define the maximum liability they accept under a liability insurance policy.
But here’s the issue: when a product defect causes serious injury, your medical expenses, lost income, and property damage can quickly exceed what the other driver’s policy or the responsible party’s coverage can handle. This is especially true when minimum coverage is involved. In such cases, the insurance company pays only what the insurance policy allows, no more, no less.
This leaves injured parties facing steep medical bills, unpaid lost wages, and long-term financial strain. Whether the claim involves bodily injury or property damage, insurance limits may prevent full compensation. When policy limits matter more than justice, it’s time to look at your legal options.
What Happens When the Claim Exceeds Policy Limits?
When your settlement demand exceeds the liability limits of the at-fault party, things get complicated. You may feel like you’ve done everything right, provided evidence, documented your injuries, and sent a reasonable settlement demand, yet the insurance coverage runs dry.
For example, if a defective airbag deploys improperly in a car crash and leads to severe injuries, and the other driver’s bodily injury liability insurance only covers $25,000 while your medical costs climb well over $100,000, you may be left with a significant financial shortfall that their insurance simply won’t cover. This gap is a major issue in both car accident injuries and broader product liability cases.
In such situations:
- You may have to pursue the personal assets of the at-fault driver or party, if they have any, and if the court allows such recovery under the applicable laws.
- You can explore your own insurance policy for underinsured motorist coverage.
- You may investigate whether umbrella coverage exists that provides additional coverage.
- You could even file a bad faith claim if the insurer acts unfairly or delays payment.
Exploring Your Own Policy Limits for Protection
Sometimes, the best protection comes from your own insurance. While most people assume the fault driver’s insurer will pay, that isn’t always enough. This is especially true when the liability insurance coverage on the other side only meets minimum state requirements.
If you carry personal injury protection (PIP), underinsured motorist coverage, or collision coverage, these parts of your own policy can help cover:
- Immediate medical bills.
- Lost wages.
- Ongoing therapy or rehabilitation.
- Vehicle repairs (in auto cases).
Reviewing your own insurance policy closely helps you understand how much your insurer will contribute. Your own protection might be the safety net you need when the responsible party carries limited coverage.
When Defective Car Parts and Low Insurance Coverage Cause a Financial Gap
Car-related product liability cases happen more often than people think. A common example involves defective brakes. Imagine you’re driving responsibly, but the brakes suddenly fail, causing a major auto accident. You suffer severe injuries, require surgery, and can’t work for weeks. The manufacturer might be at fault, but what if they have low liability coverage or limited assets?
This is when auto insurance policies become relevant. If the car crash involves another driver, their bodily injury liability insurance might apply, but only up to their liability limits. And if the defective part caused the collision, the manufacturer’s insurance policy might have minimum limits, barely covering the medical costs.
In such a scenario, injured parties must:
- Tap into their own underinsured motorist coverage.
- Seek compensation through umbrella coverage (if available).
- Use their own PIP limits.
Even though the at-fault driver or manufacturer bears responsibility, the low insurance limits often lead to a financial gap. Pursuing compensation from multiple insurance sources becomes necessary to reduce personal liability and cover total damages.
Legal Options When Facing Low-Policy Limits
If you suffer a serious injury due to a defective product and the liable party’s insurance limits can’t cover your losses, you have several legal options:
- File a lawsuit against all responsible parties to gain access to any significant assets they may hold.
- Pursue a bad faith claim if the insurance company fails to offer a reasonable settlement or violates its duty.
- Seek excess judgment against the at-fault party, which may allow you to collect beyond policy limits.
- Negotiate with multiple parties if several entities share liability (e.g., manufacturer and distributor).
These legal paths require strategic planning, documentation, and timely action. Many personal injury plaintiffs build stronger cases by identifying every possible defendant and applicable insurance policy involved in the case.
Why Liability Limits Should Never Define Your Recovery
Don’t let insurance policy limits define the value of your case. The purpose of liability insurance is to protect people financially when accidents or injuries occur, but when coverage is insufficient, victims shouldn’t have to absorb the loss.
If you’re the victim of a defective product, and your claim exceeds the policy limits, that doesn’t mean your case is over. Many injured parties mistakenly believe that once an insurance company pays the limit, nothing more can be done. That’s not true. With strong evidence, persistence, and knowledge of your rights, you can pursue the compensation you are entitled to under the law.
The law exists to protect you from personal injury and financial hardship. Don’t settle for a low payout just because someone else carried minimum limits or limited coverage.
Don’t Let Limited Coverage Stop You From Seeking Justice
When product liability and low policy limits collide, the path to justice becomes more complex but not impossible. Medical bills, lost wages, and other losses can overwhelm victims, especially when the at-fault party has insufficient liability coverage. In these situations, knowing your rights and taking action can make all the difference. If your injury compensation claim exceeds insurance coverage, don’t assume it’s the end.
Bourassa Law Group understands how insurance limits can stand in the way of justice. Our skilled personal injury attorneys fight to secure fair settlement outcomes, explore all insurance policies involved, and hold negligent parties accountable no matter their policy limits. If you or a loved one has suffered due to a defective product, contact us today for a free consultation. You deserve maximum compensation, and we’ll help you pursue it.
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