This question required additional clarification, so we have it in two parts:

Part I:

If an at-fault operator has minimum liability limits of 25/50/25 and the 3rd party has collision and suffers 40K in vehicle damages, $7400.00 in rental expenses and a $13K diminishment in value of the vehicle, wouldn't the 3rd party be entitled the maximum benefits under the 1st party policy? Or would the insurance carrier of the 3rd party be entitled to a percentage of those proceeds?

Part II: I think the issue is that the at-fault insurance policy does not have the necessary limits to pay all of the expenses. My thought is that those limits would be exhausted with the rental, diminished value and a portion of the vehicle damage. The 3rd party should be able to collect for the remaining damage to their vehicle under their collision coverage. If they were to do that would they be entitled to any of the benefits paid from the 1st party carrier?

Vermont Subscriber

Part I: You are correct. The policy of the at-fault party should pay all the 3rd party's expenses. The only way the carrier of the 3rd party would be entitled to any of the proceeds would be if the 3rd party filed the claim with his carrier first, received payment from his carrier, and then his carrier then subrogated against the at-fault party.

Part II: Did the injured party go through his own carrier or the at-fault party's? If he filed a claim through the at-fault party's carrier and exceeded limits, then he can collect the remainder from his own carrier. The insured has a right to be made whole. If the insured went through his own carrier first, that carrier should pay the insured and subrogate against the at-fault party's carrier. The injured party's carrier is only entitled to funds that it paid out would duplicate what it paid to the insured, not the first payment to the insured. Let's walk through it. The total of the accident is $60,400. Let's say the at-fault party's carrier pays $50,000, policy limits. The injured party can then go to his carrier for the difference, the $10,400. The injured party's carrier is not entitled to any portion of the $50,000 because the insured has not yet been made whole. The carrier would have to turn around and give it right back to the insured to compensate for the loss. If the injured party went through his carrier, he would be entitled to $60,400 for which his carrier could subrogate against the at-fault party.