Insurance 'Policy Limits' in Oklahoma: What They Mean, How Demands Work, and When Bad Faith Still Matters

"We'll pay you the policy limits."

That phrase ends many personal injury negotiations—but what does it actually mean? Understanding policy limits, how to demand them properly, and when the insurance company's conduct creates additional liability is essential for anyone pursuing an injury claim in Oklahoma.

What Policy Limits Are

Every liability insurance policy has limits—the maximum amount the insurer will pay for a claim. Common formats include:

Split Limits

Example: 25/50/25

• $25,000 maximum per person for bodily injury
• $50,000 maximum per accident for all bodily injuries
• $25,000 maximum for property damage

If three people are injured, each can recover up to $25,000, but total payouts can't exceed $50,000.

Combined Single Limit (CSL)

Example: $100,000 CSL

• $100,000 maximum for all damages from the accident
• Bodily injury and property damage combined

Oklahoma Minimum Limits

Oklahoma requires drivers to carry at least:

• $25,000 per person bodily injury
• $50,000 per accident bodily injury
• $25,000 property damage

Many drivers carry only these minimums—grossly inadequate for serious injuries.

Why Limits Matter

The Cap on Recovery

If the at-fault driver has $25,000 bodily injury limits and your damages are $200,000, the most you can recover from their insurance is $25,000 (absent special circumstances).

Looking for Additional Coverage

When limits are inadequate, we look for:

• Higher limits on the at-fault driver's policy (umbrella coverage)
• Other liable parties (employers, vehicle owners, bars)
• Your own UM/UIM coverage
• Commercial policies with higher limits (trucking cases)

Limits Aren't Always Available

Just because a policy exists doesn't mean full limits are available:

• Prior claims may have reduced available limits
• Multiple claimants may share limits
• Exclusions may apply

We verify actual available coverage, not just policy "face" limits.

Policy Limits Demands

A "policy limits demand" is a strategic tool: we demand the at-fault driver's insurer pay their full limits, usually with a deadline for response.

Why Make a Limits Demand

1. Resolves the claim quickly when limits are clearly inadequate
2. Creates bad faith exposure if the insurer fails to timely respond
3. Clarifies available recovery so you know what to expect
4. Opens the excess — potentially making the at-fault driver personally liable

Elements of an Effective Demand

A proper limits demand typically includes:

• Clear statement that you're demanding policy limits
• Documentation proving damages exceed limits
• Reasonable deadline for response (usually 30 days)
• Complete information needed to evaluate the claim
• Statement that failure to accept may expose the insured to excess judgment

What Happens After a Demand

Insurer accepts: You receive the limits and typically release claims against their insured.

Insurer counters: They offer less than limits, negotiations continue.

Insurer rejects: Litigation proceeds; bad faith may apply.

Insurer fails to respond: Bad faith exposure increases significantly.

Bad Faith: When Insurers Face Extra Liability

Oklahoma recognizes insurance bad faith—liability beyond policy limits when insurers act improperly. Bad faith applies differently depending on the situation:

First-Party Bad Faith (Your Own Insurer)

When your own insurance company handles your UM/UIM claim improperly:

• Unreasonably denying clearly valid claims
• Failing to investigate reasonably
• Forcing you to litigation when liability is clear

Third-Party Bad Faith (Against the At-Fault Driver's Insurer)

When the at-fault driver's insurer fails to protect their own insured:

• Rejecting reasonable limits demands when liability is clear
• Failing to settle within limits when they should
• Exposing their insured to excess judgment

Third-party bad faith claims are more complex—the insurer owes duties to their insured, not directly to you. But the at-fault driver may assign their bad faith claim to you as part of a settlement.

When Bad Faith Creates Exposure

Classic bad faith scenarios:

Clear Liability, Clear Damages, Rejected Demand

The at-fault driver ran a red light. Your damages clearly exceed their $25,000 limits. You send a proper limits demand. The insurer ignores it or makes an unreasonable counter-offer. A jury later returns a $500,000 verdict.

The insurer may owe their insured (or you, by assignment) the $475,000 excess.

Failure to Settle Within Limits

Insurer had opportunity to settle within limits but refused. Now their insured faces personal liability for the excess. This failure may be bad faith.

Unreasonable Delays

When insurers delay and delay, hoping the claimant will accept less or give up, that delay can constitute bad faith.

Practical Implications

Document Your Damages Thoroughly

Limits demands work best when you can prove damages far exceed limits. Medical records, bills, lost wage documentation—everything matters.

Don't Accept Quick Lowball Offers

Insurers sometimes offer limits quickly on minor-impact cases where they know damages are limited. Make sure you understand your full damages before accepting.

Understand What You're Releasing

Accepting limits typically means releasing the at-fault driver from further liability. Make sure you've identified all responsible parties and coverage sources first.

Consider the Timing

Limits demands often come after treatment is complete and damages are known. Premature demands may undersell your case.

We Navigate Policy Limits Strategically

Understanding insurance coverage—and when to demand limits versus when to push for more—requires strategic thinking. We analyze coverage, make proper 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. We'll explain your options and develop a strategy to maximize your recovery.