Auto insurance claim limits are set by the upper limits of coverage in your policy provision. In most cases, limits are set individually for each type of coverage. Set limits occur both per person and per incident. Most states require a set minimum claim limit by law. Your insurance policy claim limit must be at least as high as the amount required by law.
How Do Insurance Claim Limits Work?
When you purchase an insurance policy, your liability coverage will be expressed in a three digit ratio. For example, the ratio might be 25/50/15. Each of these numbers refers to the maximum amount, in thousands of dollars, that your insurance company will pay in a given situation as per the auto insurance calculator. The first number refers to the maximum amount of bodily injury protection covered for each individual injured person. The second number refers to the amount of bodily injury protection available per incident. The third number refers to the amount of property damage protection available per incident. An insight to the car insurance laws is very beneficial in this context in order to have a perfect insurance policy.
For example, assume you got into a car accident. You were at fault and you injured three people. The first person sustained $25000 in personal injury damage and $100 in property damage. The second person suffered $30,000 in personal injury damage and $9000 in property damage. The third person suffered $1000 in personal injury damage and $10,000 in property damage.
Your policy would pay the first person the full $25,000 and $1000, after your deductible was met. The second person would only be paid $25,000 from your insurance company, since there is a $25,000 per person limit. The $9000 in property damage would be paid in full because the $15,000 total property damage coverage has not been exceeded. You would be responsible for paying this person the additional $5,000 in personal injury damage out of pocket. Between the first two people, you would have paid out $50,000 in personal injury coverage ($25,000 + $25,000) so your insurance policy would be exhausted as far as personal injury protection. You would be responsible for paying the $1000 in personal injury damage the third person incurred. You would also be responsible for the bulk of the property damage, since only $5000 in property damage money is available after the $10,000 that has already been paid.
Before purchasing you need find the answer to the question “How Much Insurance“? Each state sets minimum dollar amounts for protection. Those minimums are displayed in terms of the same three number ratio described above. For example, in Maine, the minimum you can purchase is 50/100/25. However, it is often advisable to purchase more than required in order to ensure your assets are fully protected in the event of an insurance claim.
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