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Policy Limits

When you have a car, you must acquire car insurance. Your car insurance must have liability

coverage. Liability coverage is coverage that helps you pay for property damage, medical expenses, and other damages to another person and their vehicle that you are legally obligated to pay when you cause an accident.

Policy limits are the maximum amount a car insurance policy will pay after a covered accident.

Once that limit is reached, you’re responsible for paying the rest of the cost out of pocket. Policy limits cover two things: bodily injury and property damage. The policies summarize their

main liability limits by three numbers;

  • The first number is the maximum your insurance will pay for injuries to a single person after an accident.

  • The second number is the maximum for injuries to everyone you hurt in the accident — not including your own injuries.

  • The final number represents the maximum amount your insurance company will pay for property damage you cause.

While bodily limits have a per-person limit, property damage liability has only a per-accident

limit. For example; if you have liability coverage that is $25,000 limit per person for bodily injury in an accident, a $50,000 total limit per accident for bodily injury, and a $25,000 limit per accident for property damage, It would be written as 25/50/25.

Let's say you got into an accident that is your fault with a vehicle with two people in it. The

driver from the other vehicle had $15,000 worth of covered damages, and the passenger had $10,000. Both of these amounts stay under your $25,000 limit per person and your $50,000 limit for the accident.

Their car had $8,000 of damage, so you’re under your Property Damage limit too. That means you shouldn’t have to pay anything out of pocket. However, say there were four people in the car:

  • Driver had $15,000 worth of covered damages

  • Passenger one had $10,000 worth of covered damages

  • Passenger two had $10,000 worth of covered damages

  • The last passenger had $20,000 worth of covered damages.

The most your insurance could pay would be $50,000 to all four people. But the costs of all those damages equal to $55,000. That's $5,000 over that you would have to pay out of pocket.

In addition, let's say the car was new or it was more than one other vehicle involved and the damage equaled to $30,000. That's another $5,000 over. Now you would be paying $10,000 out of pocket. Before you purchase, you should read the policy and make certain you understand its contents. If you have questions about your insurance policy, you need to contact your insurance agent for clarification.

If you, or someone you know have been involved in an auto accident, call Your Accident Your Money at (888) 766-6398

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