Q: I was in an accident. I have a 25/50 policy ($25,000 per person, $50,000 per accident.) I am being sued for personal injury for more than that amount. Now what?
A: It depends. If the insurance company had a chance to settle the case within your policy limits and chose not to, then they will be on the hook for the total judgment. (There is a great case that says that the insurance company cannot gamble with their insured’s potential judgment.)
However, if there was never a chance to settle, such as where the other person’s injuries are worth $250,000 instead of $25,000) then you could potentially be liable for the excess judgment. If this is the case, you need to have a long talk with the insurance company and their attorney and possibly even a private attorney that you pay for. You need to discuss the risks of an excess judgment and how this will affect you and your assets.