Excess Judgment Loss
Reviewed by Aug 27, 2020| Updated on
What is Excess Judgment Loss?
Excess judgment loss is the additional loss that an insurer has to pay above the policy limit. This is a consequence of the insurance company that violates good business practices.
Excess judgment loss is granted by a judge if it is found that the insurance company has not taken the required steps in settling a claim. Insurance companies can act in bad faith in a variety of ways, such as using unreasonable or illegitimate grounds to deny coverage and refusing to pay claims.
Why is Excess Judgment Loss Important?
If the insurer can limit the losses resulting from claims, it can retain more premiums, and thus make more profit. This creates a financial incentive to limit claims whenever possible. A court may determine that the insurer behaved improperly, and may award the claimant an amount in excess of the policy limit.