Excess theory is a legal principle in insurance law that applies when a wrongdoer's liability insurance coverage is insufficient to cover the damages suffered by an injured party. Under this theory, if the damages exceed the available insurance coverage, the injured party may be considered underinsured. This allows them to access underinsured-motorist coverage to help cover the remaining costs.
Excess theory is primarily used in the context of personal injury claims, particularly in automobile accidents. It falls under civil law, where individuals seek compensation for damages. This principle is crucial for those who have been injured by a driver whose insurance limits are lower than the damages incurred. Users can manage their claims through legal forms and templates provided by services like US Legal Forms, which can help streamline the process.
Here are a couple of examples of abatement:
Example 1: A driver causes an accident resulting in $50,000 in damages. However, the at-fault driver's insurance policy only covers $25,000. In this case, the injured party can invoke their underinsured-motorist coverage to claim the remaining $25,000.
Example 2: A pedestrian is hit by a car, suffering $100,000 in medical expenses, but the driver has a policy limit of $30,000. The pedestrian can utilize their underinsured-motorist coverage to recover the additional $70,000 needed for their expenses.
| State | Underinsured-Motorist Coverage Requirement |
|---|---|
| California | Mandatory, unless waived by the insured |
| Florida | Optional, but recommended |
| New York | Mandatory, with minimum coverage limits |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition |
|---|---|
| Underinsured Motorist Coverage | A type of insurance that pays for damages when the at-fault party's insurance is insufficient. |
| Liability Coverage | Insurance that covers damages to others caused by the insured party. |
| Uninsured Motorist Coverage | Insurance that covers damages when the at-fault party has no insurance at all. |
If you find yourself in a situation where excess theory applies, consider the following steps:
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Excess theory is a legal principle that allows injured parties to access underinsured-motorist coverage when damages exceed the at-fault party's insurance limits.