Understanding How to Read Liability Limits

Understanding the terms to your auto insurance policy can be a bit confusing, especially when you are trying to decipher the section on liability limits. Each state determines their own minimum limits for liability insurance. Typically, a series of 3 numbers refersto bodily injury and property damage coverage liability limits.

Reading a State’s Liability Limits

Please view the liability limits for Alaska to see the standard format for the presentation of the minimum coverage:

Alaska 50/100/25

The above presentation is standard for all states and the numbers are dollar amounts. That information will differ based on where you live.

The first two numbers listed refer to thebodily injury liability limits, and the third number is for the property damage liability limit. That means that in Alaska with the50/100/25 minimums, that each person can sue for up to $50,000 for their claim, but the total claim is maxed out at $100,000 (this means 2 people can sue for $50,000 each). The final number of $25,000 is the maximum for property damage that can be claimed under that policy.

Applying Liability Limits to Accidents

If the accident claims exceed the liability limits, then the person found at fault may be sued to cover the rest of the expenses. For example, if you are the policy holder in Oregon (Oregon 25/50/10 ),and were found at fault for a collision and 4 people sue you, the first two people who made the claim for bodily injury would be able to collect $25,000 each for a maximum of $50,000. After that point, the other two people would need to sue you for the additional amount.

Auto insurance is a legal necessity to protect you and others while driving. Even after reviewing the liability limits of your state and purchasing the right amount, additional coverage may be a worthwhile expense. If you have a significant amount of assets, such as a home or cash in the bank, additional insurance can help protect those in case of a lawsuit generated from you being found at fault for an accident.