Levine & Slavit | March 10, 2026

If you were injured in an accident caused by someone else’s negligence, you may be considering a personal injury claim. As you start adding up medical bills, lost income, and other losses, an important question comes up: Can you sue for more than a defendant’s insurance policy limits in NYC?

In many cases, the short answer is yes—you can pursue compensation beyond the policy limits. The more practical question is whether the money is actually collectible, and what additional sources of recovery may be available.

Below, the attorneys at Levine & Slavit, PLLC explain how insurance policy limits work in New York and when a claim may extend beyond the defendant’s liability coverage.

How Insurance Policy Limits Work

Liability insurance is designed to protect individuals and businesses when they are sued. For example:

  • A homeowner’s liability policy may apply to a slip and fall.
  • An auto liability policy may apply to a car crash.
  • A business liability policy may apply to certain injuries on business property or arising from operations.

Policy limits are the maximum amounts an insurer is contractually required to pay under that policy for a covered claim. In auto cases, liability limits are often shown as “split limits,” such as $50,000 per person / $100,000 per accident for bodily injury—meaning the insurer may pay up to $50,000 for any one injured person, with a $100,000 total cap for all injured people combined in that accident.

Important: Policy limits typically limit what the insurer must pay—not what an injured person can demand or what a court can award. A settlement or judgment can exceed policy limits, but collecting beyond the limits may require other sources of recovery.

Can a Settlement or Lawsuit Exceed Policy Limits?

Yes, in certain situations, a claim can go beyond the defendant’s policy limits. The most common scenarios include:

1) Significant Damages That Exceed the Defendant’s Coverage

If the injuries are severe and the losses far exceed the available liability coverage, the case value may be higher than the policy limit. In that situation, the insurer may pay up to the limit, and the remaining amount may depend on whether there are collectible assets or other sources of recovery.

In theory, a person can attempt to collect an unpaid balance from the defendant’s assets (for example, wages or non-exempt property). In practice, this can be difficult if the defendant has limited income or assets, which is why identifying additional coverage or additional liable parties often becomes a major focus.

2) Additional Liable Parties (Additional Insurance Policies)

In many NYC cases, more than one person or entity may be responsible. When that happens, there may be multiple insurance policies in play—each with its own limits.

For example, in a commercial vehicle or truck crash, potential additional parties may include:

  • The driver’s employer (vicarious liability)
  • The company that owned the vehicle
  • A contractor responsible for maintenance or repairs
  • A separate entity responsible for loading or securing cargo (depending on the facts)

When multiple parties are legally responsible, it can open access to additional policy limits and, in some cases, more meaningful recovery.

3) Umbrella or Excess Policies

Some defendants carry umbrella or excess liability coverage that applies after the underlying policy is exhausted. This can be especially relevant for:

  • High-net-worth individuals
  • Business owners
  • Companies with commercial risk exposure

If an umbrella or excess policy exists, it may provide a much larger pool of available coverage after the primary insurer tenders its limit.

4) The Injured Person’s Own Coverage (Auto Cases)

In motor vehicle accidents, another major source of recovery may be the injured person’s own insurance—specifically Supplementary Uninsured/Underinsured Motorist (SUM) coverage, when available.

SUM is designed to provide additional protection when the at-fault driver has no insurance or insufficient coverage for serious injuries.

This is a common and often overlooked pathway for compensation in serious car accident cases where the at-fault driver’s policy is too small to cover the harm.

What About “Bad Faith” by the Insurance Company?

You may hear that an insurer can be held responsible for more than the policy limit if it acts in “bad faith,” such as by unreasonably failing to settle within limits when it should have.

In New York, however, these situations are highly fact-specific, and an important legal point is often misunderstood:

A “bad faith failure to settle” claim is typically a claim belonging to the insured (the policyholder), not automatically a direct claim by the injured person.

In many cases, an injured person can only pursue that type of claim if the insured’s rights are assigned to them under certain circumstances.

Separately, New York law generally does not allow an injured claimant to sue the defendant’s liability insurer directly before obtaining a judgment against the insured, and there are statutory requirements tied to any post-judgment action.

Because of these legal requirements, “bad faith” should not be treated as a simple or guaranteed route to compensation above limits.

Do You Have More Questions About Your Personal Injury Claim?

Understanding how insurance policy limits may affect your recovery can be confusing—especially in serious injury cases where the harm exceeds the available coverage.

If you have questions about your situation, call Levine & Slavit, PLLC at (212) 687-2777 to schedule a consultation.