Defendant has low insurance limits: Should I settle?

As if being injured due to another’s carelessness isn’t enough, finding out the person only had the minimal insurance coverage just adds insult to injury. But this is often the case in California where it is widely reported that a significant number of drivers either do not have liability insurance at all, or have the minimal amount permitted by law.

Update, October 2026: California raised these minimums effective January 1, 2025, under Senate Bill 1107. Drivers must now carry at least $30,000 per person and $60,000 per accident in bodily injury liability, up from $15,000 and $30,000, plus $15,000 in property damage. That is a real improvement, but $30,000 still falls far short of what a serious injury costs. Everything in this post applies with equal force under the new minimums.

Now you are stuck with awful decision of what to do? You need to settle because the money would really assist you in paying for medical bills, and covering expenses since you have missed days at work. But you don’t want to settle for less than you deserve either.

Three things you must consider before settling your case.

1. Are there any others that may be responsible for your injury other than this defendant with the low insurance limits? For example, was the driver the owner of the vehicle? If not, maybe there is some additional insurance. Did the driver use the vehicle for work purposes? If so, you may be able to tap into the employer’s insurance. Did anything else contribute to the accident – maybe the design of the roadway, or another vehicle that made an erratic lane change. You have to analyze all possible alternatives to see if there may be another responsible party. If you hire a good personal injury attorney, this should be an automatic analysis that occurs during your first meeting with them.
2. Examine whether the defendant has assets that may be available to pay for your damages. This is often a loser option. The chances of a person having a low insurance policy, but significant assets is very low. That is because when you buy insurance you and your insurance broker should be analyzing your assets in order to provide the appropriate protection. The goal is to protect your assets with insurance. And the reality is that obtaining a judgment against somebody with no assets is not very useful, practically speaking, because they always have the option to file bankruptcy.
3. Look to your own insurance. I hate when I get a client that had been badly injured by somebody with minimal insurance, but if my client doesn’t carry more than the minimal uninsured/underinsured insurance coverage, I always tell them they should be mad at themselves too. You should always look out for yourself and your family. Do not depend on others to carry sufficient insurance. You should always carry as much uninsured/underinsured insurance as possible to protect against this exact situation. So you, or your lawyer, should take a look at your insurance policy and examine your coverage. This coverage will allow you to recover additional money for your damages even if the defendant only has a minimal amount.

If you find yourself in this situation where the party that injured you has the minimum insurance, do not immediately give up. I cannot tell you the number of times I have been able to find additional responsible parties for my clients allowing my client to be fully compensated for the damages done to them. It takes hard work and determination, but it can be done. It is often best to allow an experienced lawyer with access to additional resources to handle your case for you, but this is not something you cannot do onyour own. Before you decide whether to settle, learn what your claim may be worth.

Attorney Q&A: Settling When the Defendant Has Low Limits

Q: The other driver only has $30,000 in coverage but my medical bills are way more than that. Is my case even worth pursuing?

A: It depends. In those cases, your medical liens can be reduced based on the circumstances of your case, resulting in you receiving some amount of compensation in your pocket, but that is an analysis your attorney needs to do for you. In most cases you will not be able to work out a deal, but occasionally you will run into a situation where the health insurance or medical provider will not budge, and it may not make sense for you to exert the effort just to recover money for them. And obviously in this situation, the amount of the recovery you receive, even if a deal is made, will undoubtedly be insufficient for the damages and injuries you suffered. This is why I always advise people to obtain adequate underinsured motorist coverage for themselves.

Q: If I accept the defendant’s policy limits, can I still go after my own uninsured or underinsured motorist coverage?

A: Yes. In fact, accepting the defendant’s policy limits is a requirement before you can pursue your underinsured motorist coverage.

Q: How do you actually find out whether the at-fault driver has other assets or additional insurance I don’t know about?

A: Discovering the assets of a defendant is somewhat difficult because they are not required to provide financial information in most cases. However, conducting a thorough background check of the defendant usually will reveal assets and/or evidence of potential assets. But insurance is a different story. A defendant is required to disclose insurance information once a case is in litigation, but they are not required to disclose it prior to the lawsuit being filed. In that case, we often require a declaration from the defendant prior to accepting any settlement that lists all of their insurance, among other things. This offers you some level of protection: if we later discover the information was false, you will have options to further pursue that defendant.

Q: What happens if I turn down the policy-limits offer and it turns out there really is no other money? Have I just wasted months?

A: This one is difficult because it is really fact-dependent on your situation. In some cases, you may have wasted time, but in other cases where your injuries and damages were far more than the known insurance, it would be time well spent to really nail down whether or not there were additional avenues of recovery.