An Explanation of Auto Insurance Coverage Limits

Although most people carry auto insurance, few consumers understand how their insurance policies protect them. Understanding coverage limits is an important part of becoming an educated policyholder.

Definition

A coverage limit is the most a policy coverage will pay for damages. Stated limits apply to most auto insurance coverages except comprehensive and collision coverage.

Per-Person Limit

A "per-person" limit is the most a coverage will pay for each person's injuries. If you carry an auto insurance policy with a $100,000 per person liability limit, the maximum each injured person will receive is $100,000.

Per-Accident Limit

A "per-accident" limit is the maximum a coverage will pay for an accident, regardless of how many people suffered injuries or property damage. If you carry liability coverage with a $300,000 per accident liability limit, and you injure several people, the $300,000 will be divided among the injured parties according to their expenses.

Aggregate Limit

An aggregate limit is the most a coverage will pay during a policy term, no matter how many accidents occur.

Damages Exceeding Limits

If injuries or damages exceed the coverage limits, you will be responsible for damages left after your limits have been used up.

References

• CarInsurance.com: Insurance Coverage Definitions
• Edmunds.com: How Much Insurance Do You Need