Auto Liability Limits

Automobile insurance is a type of insurance that provides financial protection to the policyholder in the event of an accident involving their vehicle. One of the key components of an automobile insurance policy is the limits of liability, which refers to the maximum amount that the insurance company will pay in the event of a claim. In this article, we will discuss automobile insurance limits of liability, how they work, and why they are important.

Automobile insurance limits of liability are typically expressed in three numbers, such as 50/100/50. The first number refers to the maximum amount of bodily injury liability coverage per person, the second number refers to the maximum amount of bodily injury liability coverage per accident, and the third number refers to the maximum amount of property damage liability coverage per accident.

For example, if your policy has limits of liability of 30/60/25, this means that your insurance company will pay up to $30,000 per person injured in an accident, up to a total of $60,000 for all people injured in the accident, and up to $25,000 for property damage resulting from the accident. If the damages exceed these limits, you could be held personally liable for the difference.

It is important to note that these limits of liability are not necessarily the amount of coverage that you should carry. Depending on your personal financial situation and the assets that you must protect, you may want to consider carrying higher limits of liability. At Moore Farms & Insurance we recommend a minimum of 50/100/50.

The reason for carrying higher limits of liability is that if you are found to be at fault in an accident and the damages exceed your insurance policy limits, you could be held personally liable for the difference. This could result in a lawsuit against you, which could lead to wage garnishment, asset seizure, or other financial consequences.

Another important factor to consider when choosing your limits of liability is the cost of your insurance premiums. Generally speaking, the higher your limits of liability, the higher your premiums will be. However, the cost of carrying higher limits of liability may be worth it in the long run if it provides you with greater financial protection.

In addition to bodily injury and property damage liability coverage, most automobile insurance policies also include other types of coverage, such as collision coverage and comprehensive coverage. Collision coverage pays for damages to your vehicle resulting from a collision with another vehicle or object, while comprehensive coverage pays for damages to your vehicle resulting from non-collision events, such as theft, vandalism, or natural disasters.

When choosing your limits of liability for your auto policy, it's important to consider all the different types of coverage that you need and to choose limits that provide you with adequate financial protection. While it can be tempting to choose lower limits of liability in order to save money on your premiums, doing so could ultimately leave you vulnerable in the event of an accident.

In conclusion, automobile insurance limits of liability are a key component of any automobile insurance policy. By understanding how they work and choosing limits that provide you with adequate financial protection, you can help to ensure that you are covered in the event of an accident. While the cost of carrying increased limits of liability may be higher, the peace of mind that it provides may be worth the investment.