What Happens When There Are Multiple Injury Victims and Not Enough Insurance?

One of the most common misconceptions about car accident claims is that the at-fault driver’s insurance company automatically pays every injured person in full. Unfortunately, that is not always possible. In many cases, insurance companies make low settlement offers or limit payouts to the policy maximum, which can leave injured victims with far less than the full value of their claims.  

In serious accidents involving multiple injured people, there may not be enough insurance coverage available to compensate everyone for their losses. When that happens, the insurance company typically offers its policy limits, and the injured parties must determine how those funds will be divided. Working with an experienced personal injury attorney can help you understand your rights and navigate the complex claims process when multiple victims are involved.

I have multiple cases in New Mexico right now involving this exact situation and since there are often many questions that come up, I thought it might be helpful to explain a few of the key issues. 

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What Is a Global Settlement Offer?

A global settlement offer occurs when an insurance company offers to pay all available bodily injury liability insurance under the policy in exchange for resolving all claims arising from the accident. For example, a driver may carry liability limits of $100,000 per person and $300,000 per accident. You’ll often see this written or referred to as a $100,000/$300,000 policy. That means:

• No single injured person can receive more than $100,000.
• The insurance company will pay no more than $300,000 total for everyone injured in the crash combined.

If several people are injured and their combined damages exceed $300,000, there simply is not enough insurance to fully compensate everyone. Rather than negotiate each claim separately, the insurance company may offer the entire $300,000 and ask the claimants to work out how the money should be divided.

How Is the Money Usually Divided?

There is no single formula that must be used in every case. However, one of the most common approaches is a pro-rata allocation. Under a pro-rata approach, each claimant’s damages are evaluated and compared to the total damages suffered by all claimants. The settlement funds are then divided proportionally based on the relative value of each person’s claim. To understand how this works, let’s look at a simplified example.
Example
Assume there are three injured people involved in a crash:

• Person A has damages valued at $50,000.
• Person B has damages valued at $100,000.
• Person C has damages valued at $150,000.

The total damages equal $300,000. Now assume the at-fault driver has a $50,000/$100,000 policy. That means there is $100,000 of bodily injury liability insurance available to compensate all three people. Because the total damages ($300,000) exceed the available insurance ($100,000), there is not enough money to fully compensate everyone. One common approach is to divide the available insurance on a pro-rata basis. Under that approach:

• Person A suffered 16.7% ($50,000 divided by $300,000) of the total damages and would receive approximately $16,700 (16.7% x $100,000). 
• Person B suffered 33.3% of the total damages and would receive approximately $33,300.
• Person C suffered 50% of the total damages and would receive approximately $50,000.

Although no one is fully compensated, each claimant receives a share of the available insurance that is proportional to the value of his or her claim. The actual allocation process is often more complicated than this example. The parties may disagree about the value of particular claims, and there is often negotiation involved. However, this example illustrates the general concept behind a pro-rata allocation.

Why Don’t They Just Divide the Money Equally?

At first glance, dividing the available insurance equally among all claimants may seem like the simplest solution. However, it is often not the fairest one. Not all injuries are the same. For example, imagine three people are injured in the same accident:

• One person suffers minor injuries and requires only a few weeks of treatment.
• Another suffers a broken bone and misses several months of work.
• A third undergoes surgery and is left with permanent limitations.

Although all three people were involved in the same crash, their damages are very different. Dividing the insurance proceeds equally would treat those claims as though they were the same when they clearly are not. That is why insurance companies, attorneys, and courts often look to the relative value of each claimant’s damages when determining how limited insurance proceeds should be allocated.

While there may be disagreements about the value of particular claims, most people would agree that someone who suffered significantly greater injuries should generally receive a larger share of the available insurance than someone whose injuries were relatively minor. For that reason, equal division is uncommon in serious multi-claimant accidents. Instead, the parties typically focus on evaluating each person’s damages and allocating the available insurance in a way that more closely reflects the severity of the injuries and losses involved.

I have used this approach in cases involving high emotions and conflict among the parties and when the damages are relatively minor. Typically, in those situations, the parties would not agree to any resolution unless it was completely equal.  What’s the lesson?  Every case is different and sometimes it takes evaluating a variety of factors to find the right solution for any case. 

Does Everyone Have to Agree?

Usually, yes. Because the insurance company wants a complete resolution of all claims, it generally requires all claimants to participate in the settlement before paying out the policy limits. This can create delays, especially when:

• Some people are still receiving medical treatment.
• The full extent of injuries is not yet known.
• Some claimants do not have attorneys.
• The parties disagree about the value of individual claims.

Unfortunately, one claimant’s delay can affect everyone else involved in the process. I have also seen some claimants weaponize this control by intentionally delaying to impact the other claimants.  The more claimants involved, the harder it is to get everyone to agree. Mediators can be very helpful in these situations.  

Why Can These Cases Take So Long?

In most accidents, an injured person can settle once their treatment is complete and their damages are known. In a multi-claimant policy limits case, however, everyone else’s situation matters too. Before the settlement funds can be divided fairly, there must be enough information to evaluate all of the claims. That often means waiting for multiple injured people to finish treatment, gather records, and calculate damages.

As a result, these cases often take significantly longer than a typical car accident claim. In some situations, several claimants may not have attorneys and may not fully understand the process. That can create additional delays because everyone must generally be in a position to evaluate and present their claims before the allocation process can move forward.

What If I Have Underinsured Motorist (UIM) Coverage?

Underinsured Motorist coverage can be extremely important in these situations. UIM coverage may provide additional insurance benefits when the at-fault driver’s insurance is insufficient to fully compensate you for your injuries. For example, suppose:

• The at-fault driver’s policy pays you $20,000.
• Your damages are much greater than that.
• You have $50,000 in available UIM coverage.

Depending on the policy language and applicable state law, your UIM coverage may provide additional compensation beyond what you recover from the at-fault driver. In many serious accidents, UIM coverage becomes one of the most important sources of recovery available to an injured person. Keep in mind issues of offsets can come into play, but it still takes pressure off having to recover the max possible from the at-fault carrier if you have UIM coverage to help you.

Should I Be Concerned About How Much of the Liability Policy I Receive?

That depends on the circumstances. In some cases, every dollar matters because there may be no other available insurance. In other situations, a person has substantial UIM coverage that effectively becomes the primary source of recovery once the liability limits are exhausted. Every case is different. An attorney can evaluate all available insurance coverage and determine the best strategy for protecting your interests.

What Should I Do While the Claims Process Plays Out?

The most important thing is to focus on your recovery. Continue treating with your medical providers, follow their recommendations, and keep records of your injuries and expenses. Your attorney can work on gathering medical records, calculating damages, evaluating available insurance coverage, and protecting your position while the claims process unfolds.

The Bottom Line

When multiple people are injured in a serious accident, there may not be enough insurance to fully compensate everyone involved. In those situations, insurance companies often make a global settlement offer and ask the claimants to divide the available funds. While the process can be frustrating and time-consuming, understanding how policy limits, pro-rata allocations, and underinsured motorist coverage work can help you know what to expect.

Need help? Have questions?

If you have questions about a multi-victim accident or whether additional insurance coverage may be available, speaking with an attorney early can help you better understand your options. Our dedicated personal injury team at The Injury and Disability Law Center is here to help you. Contact us today to schedule your free initial consultation by calling our office at 575-300-4000, starting a chat, or filling out our online form. If you want even more information, feel free to check out my free book, Car Accident Cases Made Simple(r), (Link) where I discuss this topic and more. If you want even more information, feel free to check out my free book, Car Accident Cases Made Simple(r), where I discuss this topic and more.