What Are Policy Limits? How Do They Affect My Personal Injury Claim?

While everyone is required to have car insurance (read as: required, but may not always have), many of my clients don’t understand how the policy limits for their insurance coverage work until they are in a car accident. By that point, it can be too little, too late.

So let’s start from the beginning. Policy limits are the maximum benefit an insurance company will pay for a policyholder if/when an insured event occurs. Meaning, the limits are the maximum amount your insurance company is contracted to pay in an accident. Now, don’t confuse that to mean that is how much they will pay in any accident. It just means that your insurance company is not required to pay any more than what you agreed your policy limits would be.

Typically, your policy limits are expressed as three numbers. For this explanation, we will use the California minimum, 15/30/10. The first number, 15, represents your per person, bodily injury limits of $15,000. Meaning, if someone gets hurt and you are found liable for the accident, your insurance will cover up to (but not exceeding) $15,000 of any one person’s damages. The 30 represents $30,000 total bodily injury coverage per accident, meaning your insurance will not pay over $30,000 for the entire accident. So, if multiple people are involved, they all have to share that $30,000, not matter what the circumstances. The last 10 in the series translates to $10,000 property damage per accident.

So, how does this affect your accident? Depends on which side of the table you sit.

If you are found liable for the accident (i.e. the accident is your fault), your limits will be the maximum amount your insurance covers for any damages. On the plus side, your insurance will cover you. On the downside, if the other person(s) involved in the accident suffer damages much higher than your policy limits, you can be found responsible for the difference.

If you are the injured party, the at-fault party’s limits will control the maximum policy limits that will be paid out by the insurance company. The good news, the other party has readily available funds to help with your damages. However, those funds are limited which can leave you in a tough spot. The limitations become even more apparent when there are multiple cars involved in the accident. The policy limits are the maximums per accident, and they are not increased no matter how many people or how severe the accident may be. There are way to protect yourself through your own insurance by paying for uninsured/underinsured motorist coverage.

Policy limits can have a huge impact when you are in a car accident, and you need to know what that could mean for you. If you have been in an accident, consult with a personal injury attorney to help navigate your accident and make sure you understand your rights and protections. The lawyers at Injury Compensation Law PC provide excellent service and quick resolution, and there are no fees until compensation is obtained.  You can reach the Los Angeles/Orange County/Inland Empire office at 714-627-2622 or the San Diego office at 619-550-2111. Drive safe!



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