Auto Insurance Liability Limits: The Basics

Auto insurance liability limits describe the dollar amount of coverage that a driver has purchased and that the insurance company has agreed to provide in return. Liability coverage is put in place to protect the policyholder from being personally responsible for paying for damages he or she caused in an at-fault accident.

Liability coverage is typically described as three numbers, which may look like this: 25/50/25. The first number refers to the level of bodily injury liability coverage to pay for the injuries or death of a single accident victim, and the second one indicates the level of protection in place to pay for all injuries and damages for all people injured or killed in the same accident. The third number is for property damage coverage, which pays for repairs to the other driver’s vehicle and any public property damaged or destroyed in the accident.

When an at-fault accident occurs, the insurance company will cover personal injuries and damages up to the policy limit the driver has chosen. The insurance company will also pay forĀ  costs involved in defending a legal action.

If a driver has a policy with $100,000 in liability coverage and the total amount of damages caused is $120,000, the insurance company will pay up to the policy limit only. The remaining $20,000 must be paid by the policyholder personally.

All consumers who are looking for car insurance coverage should consider their auto insurance liability limits very carefully to ensure that they have enough coverage in place to pay for damages caused in a serious accident.