Thursday, April 10, 2014

Auto Liability Basics

Auto insurance liability limits come in a few different forms as well as in many different levels. The two main forms of auto insurance liability are “Split Limits” and “Combined Single Limit”. One main thing to first understand about auto insurance liability limits is that these limits are what’s used by the insurance company to pay out on your behalf the damages that you cause to someone’s body and or property. Auto insurance liability limits are not used to pay money toward your injuries or property damage. Those coverages are auto insurance medical payments coverage, comprehensive coverage, collision coverage and uninsured/underinsured motorist coverage. We will not be addressing those items in this blog post.

Split Limits have three different ceilings or maxes that the insurance policy will pay out. Those three different maxes are “bodily injury per person”, “bodily injury per accident” and “property damage”. Often you will see insurance policies with split limits of $250,000 bodily injury per person and $500,000 bodily injury per accident and $100,000 in property damage. What this means is that if you cause an auto accident the most that one individual will get for their bodily injuries is $250,000 from your insurance policy. If there are multiple people in the other party’s vehicle then the most the policy will pay out is $500,000 in bodily injury to all involved. Accidents that you cause will usually result in property damage to others and $100,000 is the max that the above example limits will pay for someone else vehicle or property.
Combined Single Limit still covers bodily injury and property damage but there is only one lumped together limit for the policy. For example if you have a $500,000 combined single limit policy than the most the other party will receive for their bodily injuries (no matter how many people are in the vehicle) and property damage that you cause is $500,000. There is not a per person limit sublimit nor a property damage sublimit.

There are many different levels of auto insurance liability limits you can have. Each state has a minimum which means you at least have to have the amount they require in order to legally operate a vehicle. This limit is usually very low and in order to best protect your assets and help restore people that you cause injury and damage to we recommend much higher limits of insurance. Obviously the higher the limits of insurance you purchase the more money the insurance policy will cost but extra money you spend could be the difference in protecting your assets after a large claim or have the possibility of losing some of your assets.