Insurance Policy Limits in Oklahoma

"We'll pay you the policy limits." That phrase ends many personal injury negotiations — but what does it actually mean? Every liability insurance policy contains a maximum amount the insurer will pay for a covered claim, and understanding how these limits work, how to demand them strategically, and when the insurance company's conduct creates additional liability is essential knowledge for anyone pursuing a serious injury claim in Oklahoma.

Under 47 O.S. § 7-204, Oklahoma requires all drivers to maintain minimum liability coverage — but those minimums are dangerously inadequate for anything beyond the most minor fender bender.

How Policy Limits Work

Insurance policies express limits in two common formats. Split limits — the most common for personal auto policies in Oklahoma — set separate maximums for bodily injury per person, bodily injury per accident, and property damage. Oklahoma's mandatory minimums are $25,000 per person for bodily injury, $50,000 per accident for all bodily injuries combined, and $25,000 for property damage. Many drivers carry only these minimums, which means the most you could recover from their insurer for your injuries is $25,000 — regardless of whether your actual damages are ten or twenty times that amount.

Combined Single Limit policies set one maximum that covers all damages from a single accident. A $100,000 CSL policy, for example, provides $100,000 total for all bodily injury and property damage claims arising from one accident. Commercial policies and umbrella coverage often use this format.

The critical thing to understand is that if the at-fault driver carries $25,000 per person limits and your damages are $200,000, the most you can recover from their insurer is $25,000 absent special circumstances. The policy limit is a hard ceiling on what that insurer will pay, no matter how catastrophic your injuries.

Finding Additional Coverage

When the at-fault driver's limits are inadequate — and for serious injuries, they almost always are — the job becomes identifying every available source of coverage. Your own uninsured/underinsured motorist coverage may provide additional recovery above what the at-fault driver's policy pays. Other potentially liable parties may carry separate insurance with higher limits: employers whose employees caused the accident while working, vehicle owners who entrusted their car to a negligent driver, bars or restaurants that over-served a visibly intoxicated person who then caused a crash, or commercial entities with umbrella policies providing millions in coverage.

Identifying all available coverage sources is one of the most important things an attorney does in a personal injury case — and it must happen early, before you settle with any single insurer. Accepting the at-fault driver's $25,000 limits and signing a release before you've identified other liable parties or your own UIM coverage can leave substantial money on the table permanently.

We always verify actual available coverage, not just what the policy says on its face. Prior claims from the same accident may have already reduced available limits. Multiple injured parties may need to share a single per-accident limit. Policy exclusions may apply. And coverage disputes between insurers may need to be resolved before anyone pays anything.

The Policy Limits Demand

A policy limits demand is one of the most powerful strategic tools in personal injury practice. It is a formal demand to the at-fault driver's insurer to pay their full policy limits, typically with a defined deadline for response — usually 30 days.

An effective limits demand includes a clear statement that you're demanding the full policy limits, comprehensive documentation proving your damages significantly exceed those limits, a reasonable deadline for response, all information the insurer needs to evaluate the claim, and a statement that failure to accept may expose their insured to an excess judgment — meaning personal liability for the amount above policy limits.

The demand works because it puts the insurer in a difficult position. If liability is clear and your damages obviously exceed the policy limits, the insurer has every reason to pay — it resolves their exposure and protects their insured. But if they refuse or delay unreasonably, they've created what Oklahoma law calls bad faith exposure: the risk that they'll be liable not just for the policy limits, but for the entire judgment, however large.

The demand also clarifies your strategic position. If the insurer accepts, you receive the limits quickly and move on to other coverage sources. If they counter with less than limits, negotiations continue with the bad faith backdrop in place. If they reject or simply fail to respond, you proceed to litigation knowing the insurer's unreasonable conduct may dramatically increase your total recovery.

Bad Faith: Recovery Beyond Policy Limits

Oklahoma recognizes insurance bad faith — liability that exceeds policy limits when insurers act improperly. This applies in two distinct contexts that create different legal dynamics.

First-party bad faith arises when your own insurance company mishandles your claim — most commonly your UM/UIM claim after an accident with an uninsured or underinsured driver. If your own insurer unreasonably denies a clearly valid UM claim, fails to investigate reasonably, or forces you into litigation when liability and damages are clear, you may have a bad faith claim that allows recovery of consequential damages, emotional distress, and potentially punitive damages beyond the policy amount.

Third-party bad faith involves the at-fault driver's insurer failing to protect their own insured. When an insurer rejects a reasonable limits demand in a case where liability is clear and damages obviously exceed limits, and a jury subsequently returns a verdict exceeding the policy limits, the insurer may owe their insured the entire excess judgment amount. The at-fault driver can then assign this bad faith claim to you as part of a settlement — effectively making the insurer liable for the full verdict, not just the policy limits.

The classic bad faith scenario illustrates how this works in practice. The at-fault driver ran a red light. Your damages clearly exceed their $25,000 limits. You send a proper limits demand with a 30-day deadline and complete documentation. The insurer ignores it or makes an unreasonable counter-offer of $10,000. You proceed to trial and the jury returns a $500,000 verdict. The insurer may now owe their insured — and by assignment, you — the $475,000 excess, because they had a clear opportunity to resolve the case within limits and unreasonably failed to do so.

Strategic Considerations

Timing matters when making limits demands. You generally shouldn't demand limits until you've reached maximum medical improvement and fully understand your damages. A premature demand — made before treatment is complete or the full extent of injury is known — may undersell your case if damages turn out to be less than you projected, undermining the credibility of the demand itself.

Documentation must be thorough enough that the insurer has no legitimate basis for rejecting the demand. Medical records and bills, lost wage documentation, photographs, expert opinions — everything that proves your damages exceed the policy limits should be included. The goal is to make the demand so well-supported that a jury would view any rejection as unreasonable.

Understanding what you're releasing is equally important. Accepting limits typically requires you to release the at-fault driver from further personal liability. Before signing any release, make sure you've identified all other responsible parties and coverage sources, understand whether signing this release affects your claims against other parties, and have preserved all other avenues of recovery.

At Addison Law, we analyze coverage, structure strategic limits demands, and pursue bad faith claims when insurers act improperly. If you've been injured and you're hearing about "policy limits" from insurance companies, contact us for a free consultation.

Frequently Asked Questions

What are Oklahoma's minimum auto insurance policy limits?

Oklahoma requires drivers to carry at least $25,000 per person for bodily injury, $50,000 per accident for all bodily injuries, and $25,000 for property damage — often written as 25/50/25. These minimums are grossly inadequate for serious injuries like spinal cord damage or traumatic brain injuries, which can easily generate hundreds of thousands or millions in damages.

What happens if my damages exceed the at-fault driver's policy limits?

You have several options: your own uninsured/underinsured motorist coverage may provide additional recovery; there may be other liable parties with separate insurance such as employers, vehicle owners, or establishments that over-served alcohol; or the at-fault driver may have umbrella coverage. An attorney can identify all available coverage sources to maximize your total recovery.

What is a policy limits demand in Oklahoma?

A policy limits demand is a formal request to the at-fault driver's insurer to pay their full policy limits, typically with a 30-day deadline. It includes documentation proving your damages exceed the limits and warns that failure to accept may expose their insured to an excess judgment. It is a strategic tool that can resolve claims quickly or create bad faith leverage.

When does insurance bad faith apply in Oklahoma?

Bad faith arises when an insurer acts unreasonably — for example, rejecting a proper limits demand when liability and damages are clear, failing to investigate a claim, or unreasonably delaying resolution. Oklahoma recognizes both first-party bad faith from your own insurer and third-party bad faith from the at-fault driver's insurer.

Can I recover more than the policy limits?

Yes, in certain circumstances. If the insurer acted in bad faith — such as unreasonably refusing to settle within limits — they may be liable for the entire excess judgment amount. Additionally, pursuing multiple liable parties, umbrella policies, or your own UM/UIM coverage can increase your total recovery significantly beyond any single policy's limits.

Should I accept a quick policy limits offer from the insurance company?

Not necessarily. A fast limits offer sometimes indicates the insurer knows your claim is worth far more. Before accepting, make sure you understand the full extent of your damages including future medical costs, have identified all responsible parties and coverage sources, and understand what you're releasing. Once you accept and sign a release, you typically cannot pursue additional claims against that party.

This article is for general information only and is not legal advice.