What are Policy Limits?

Your insurance policy has certain limits to its coverage - what does that mean?

What are policy limits?

Policy limits are the maximum amount an insurance company will pay for a covered claim under an insurance policy. The amount available depends on the type of insurance, the policy terms, and the facts of the case. For example, if a driver has an insurance policy with a $50,000 limit for injuries to one person, the insurance company generally will not pay more than $50,000 for that person's covered injury claim under that limit.

Policy limits are not the same as the value of an injury claim.

A person’s injuries and losses may be worth more than the amount the insurance company is required to pay.

How do policy limits affect an auto accident case?

After a car accident, the at-fault driver's insurance may pay for covered injuries and losses, up to the policy limits. For example, if the at-fault driver has a $25,000 bodily injury limit per person and the injured person has $60,000 in medical bills and other losses, the available insurance may not cover the full amount of the claim. The final amount depends on the available coverage, who was at fault, the evidence, and the terms of the policy. A Personal Injury Attorney can identify all possible insurance policies and determine the limits that may be available before advising a client about settlement options.