What Every Plaintiff Attorney Should Know About Policy Limit Discovery

Policy limit discovery is a pivotal element in personal injury and insurance litigation. For plaintiff attorneys, understanding how to uncover, evaluate, and leverage policy limits can be critical in securing fair compensation for their clients. Despite its importance, many plaintiff attorneys face challenges navigating the complexities of policy disclosure laws, insurance company resistance, and procedural nuances.

This article outlines what every plaintiff attorney should know about policy limit discovery, from its legal foundations to practical strategies, empowering lawyers to more effectively advocate for their clients.

Why Policy Limit Discovery Matters

Insurance policy limits set the ceiling for what an insurer may be obligated to pay under a liability policy. For plaintiffs pursuing damages from insured defendants, knowing these limits early in the case is essential for several reasons:

Settlement strategy: If damages significantly exceed the policy limit, the plaintiff may aim to settle quickly for the policy amount, particularly if the defendant lacks substantial assets.

Litigation efficiency: Discovering a minimal policy limit early can guide resource allocation and avoid unnecessary litigation expense.

Bad faith claims: If an insurer refuses to settle within limits when it should, knowing the limit is necessary groundwork for a future bad faith claim.

Statutory and Case Law Support

Policy limit discovery rights vary by jurisdiction, but many states have enacted statutes or follow case law that supports disclosure under specific conditions.

States with Mandatory Disclosure Statutes

A number of states, such as California (Cal. Code Civ. Proc. § 2017.210) and Florida (Fla. Stat. § 627.4137), require defendants or insurers to disclose policy limits upon request. These laws usually obligate insurers to provide:

·       Policy limits

·       Name of insurer

·       A copy of the policy or declaration page

·       Whether coverage is being contested

·       Common Law Discovery

In jurisdictions without clear statutory mandates, courts often permit policy limit discovery under traditional discovery rules if the information is “reasonably calculated to lead to the discovery of admissible evidence.” Courts frequently hold that policy limits meet this standard because they influence settlement and case valuation.

For example, New York (CPLR § 3101(f)) requires a party to disclose the existence and contents of any insurance agreement that may satisfy part or all of a judgment. This includes policy limits.

Timing Is Key

Requesting policy information early in the case can shape strategy and avoid delays. Plaintiff attorneys should routinely send a policy limits demand letter soon after initiating representation—often in the first notice of claim. In some jurisdictions, early written requests under applicable statutes can compel disclosure within 30 days.

Moreover, pre-litigation policy limit disclosure can support future bad faith claims. If an insurer refuses to settle for limits when liability is reasonably clear and damages are catastrophic, the groundwork for a bad faith suit is stronger when it’s clear the insurer was given an opportunity and the limit was known.

Crafting an Effective Demand Letter

To increase the likelihood of prompt and complete policy disclosure, a policy limit demand letter should include:

·       A clear request for disclosure of all liability insurance coverage

·       Citation to the applicable statutory or case law authority (if any)

·       Request for declaration pages or the entire policy

·       Specific deadline for response (usually 20-30 days)

A statement that the information is being sought to evaluate the case and pursue a settlement

Using language that emphasizes cooperation and evaluation—not aggression—can improve compliance and avoid unnecessary resistance from insurers.

Overcoming Common Objections

Insurance companies and defense counsel often resist limit discovery. Common objections include:

·       Relevance: Arguing that policy limits are not relevant to liability or damages.

·       Premature discovery: Claiming it’s too early in the case.

·       Confidentiality: Citing privacy or trade secret protections.

Most courts reject these objections, especially when policy limits are relevant to settlement. Plaintiff attorneys should be prepared to file motions to compel and cite persuasive case law supporting discovery.

In responding to confidentiality objections, offer to enter a protective order or stipulate that the information will be used only for litigation purposes.

Bad Faith Implications

One of the most strategic reasons for obtaining policy limits early is the potential for a bad faith claim. When insurers unreasonably refuse to settle within policy limits—despite clear liability and damages—they expose their insured to personal liability.

Bad faith claims often hinge on whether:

·       The insurer knew the claim could exceed policy limits

·       The plaintiff made a reasonable demand within limits

·       The insurer had the opportunity to settle but refused or delayed unreasonably

Knowing the policy limit makes it easier to craft a demand letter that meets these criteria and preserves the record. Many multimillion-dollar bad faith verdicts have stemmed from failure to disclose or settle within policy limits when the opportunity existed.

UM/UIM and First-Party Claims

Policy limit discovery is equally important in uninsured/underinsured motorist (UM/UIM) claims. In these cases, the plaintiff is dealing directly with their own insurer, and the rules of discovery may vary. Some states allow for discovery of all applicable policies, while others require formal litigation to compel disclosure.

In first-party claims (such as property damage or medical payments), the policy language itself may dictate how limits are disclosed. Be sure to review the policy terms closely and send a written request tailored to that language.

Multiple Defendants or Layers of Coverage

Plaintiff attorneys must also consider:

Excess or umbrella policies: These may kick in once primary coverage is exhausted, but insurers don’t always disclose them voluntarily.

Multiple defendants: Each may have separate coverage; request disclosure from each party individually.

Self-insured retentions (SIRs): Some corporations or municipalities are self-insured up to a certain threshold, which changes how and when coverage is triggered.

A thorough investigation should include checking public records, prior verdicts against the defendant, or business filings that may reference insurance.

Ethical and Strategic Considerations

While aggressively pursuing policy limit discovery is often in the client’s best interest, plaintiff attorneys should remain mindful of:

Accuracy in estimating damages when making policy-limit demands

Avoiding threats of bad faith unless appropriate—overuse can reduce credibility

Maintaining civility in communication with insurers and defense counsel

Using policy limits to inform—not dominate—your settlement strategy will typically yield better long-term results.

Conclusion

For plaintiff attorneys, knowing how to discover and use insurance policy limits can dramatically affect case outcomes. Whether negotiating a pre-suit settlement or preparing for trial, understanding the available coverage helps attorneys protect clients from inadequate compensation and lays the groundwork for holding insurers accountable.

By proactively seeking policy limits, citing appropriate legal authority, and responding strategically to resistance, plaintiff attorneys can navigate this essential aspect of litigation with confidence and clarity.