What happens if my expenses exceed my insurance settlement?

Settlements are designed to provide financial support to those injured in accidents, but what happens if your medical expenses, lost income, and other costs exceed the amount you receive? Sadly, this scenario occurs more often than many realize. Here’s what it means for you and the steps you can take.

1. Reasons Settlements Might Not Cover Everything
   Several factors can result in a settlement that falls short of your actual costs:
    

• Insurance policy limits: Insurers only pay up to the maximum coverage stated in the policy, even if your expenses exceed that amount.
   
• Comparative fault: If you share some responsibility for the accident, your payout may be reduced accordingly.
   
• Underestimated damages: Settlements sometimes fail to fully consider ongoing medical care, lost wages, or emotional suffering.
   

1. Order of Paying Off Debts
   When your bills surpass the settlement amount, the payments are usually prioritized like this:
    

• Medical liens, such as claims from hospitals, doctors, or your health insurer, are typically settled first.
   
• Legal fees and case-related expenses come next.
   
• Whatever remains, if any, is paid to you.
   

This can mean you end up with very little or no money after all obligations are met.

1. Negotiating Medical Expenses
   You might not have to pay full price on your medical bills. Many providers are open to:
    

• Discounting balances if you pay in a lump sum.
   
• Accepting a portion of your settlement as full payment.
   
• Collaborating with your lawyer to reduce outstanding liens.
   

1. Additional Solutions to Consider
   If your bills still outpace your settlement, you might explore:
    

• Using your health insurance to cover remaining medical costs.
   
• Accessing underinsured motorist coverage, if your policy includes it.
   
• Setting up payment plans with medical providers.
   
• Considering bankruptcy or debt settlement only as a last option.
   

1. How to Avoid This Problem
   Take these steps to protect yourself:
    

• Don’t settle too quickly without reviewing the offer carefully.
   
• Consult professionals who can help estimate future expenses.
   
• Be aware of your insurance policy’s coverage limits early on.
   
• Keep thorough records of all accident-related costs.