Liability: Collecting More Than the Policy Maximum

LIABILITY Collecting More Than the Maximum When a person buys liability insurance, the company agrees to pay dam age awards against him — but only up to the amount specified in his policy.

The rest comes out of his own pocket.

Recently, however, state courts across the U.S. have ordered insurance companies to pay far more than the policy's face value. In one remarkable California case, a company that had issued a policy with a $10,000 limit was ordered to pay more than $150,000.

Iffy Chances. At issue is a conflict of interest between the company and the insured—both represented by the same...