Bodily Injury Limit

What is the name of your state (only U.S. law)? Texas

About 1 1/2 years ago my wife had totaled a car with her "friend" Alice as the passenger. Apparently we got a letter saying that within a month, Alice will cap her $25k bodily injury claim. Alice had previous medical issues and was on disability before the accident and walked away with scratches and bruises. Now my father-in-law is being held responsible because he is the main policy holder and will be sued. I believe Alice is committing insurance fraud. What should we do?

You don't know what her injuries were/are so you have no IDEA whether any fraud is taking place. If she had previous health problems which predisposed her to further injury from the accident, your wife is responsible for that too. If the insurance company has accepted the claim and is preparing to pay out the limits, you can rest assured that they investigated and received the proper documentation supporting her injuries.

Both your wife AND her father will be named in any suit and the insurance will provide for their defense. They can speak to their appointed attorney at that time for further advice.

ha ha yea, Insurance companies are not notorious for just handing out policy limits for little to no reason. They are more likely to try to deny deny deny.

So the woman was hurt in the accident, and she is right to try to get full compensation for her injuries.

And realistically, unless wife or FIL has some serious assets despite the laughably low insurance coverage, what's probably going to happen is Alice and her lawyer will take the $25k and sign a release not to pursue it any further.