Title : Insurance 101 - Personal Auto Limits
link : Insurance 101 - Personal Auto Limits
Insurance 101 - Personal Auto Limits
You've worked hard to earn enough money to
purchase your car and are buying insurance to protect your investment. After all, you
can't afford to pay for a big accident out of your own pocket. But how do you know HOW
MUCH insurance you need? The amount of insurance you purchase is usually called your POLICY
LIMIT, or limit of coverage. It's the maximum amount your insurance company will pay for
a particular loss, or losses, while your insurance policy is in effect.
Your policy may include
a variety of limits, so we'll take a look at the main kinds. First, let's look at liability
insurance. If you are found legally responsible for harm to someone else or their property,
you will have to pay for the damages you caused. Liability insurance can help with that.
In
an auto policy, the portion that pays for harm to another person is called Bodily Injury.
You will likely see a set of two numbers for that coverage limit -- something like 250/500.
The first number is the amount that the insurance company will pay PER PERSON in an accident.
The second number is the TOTAL amount that the company will pay for an accident, regardless
of how many people are involved. The numbers are in thousands so if your policy shows 250/500,
it means $250,000 per person, $500,000 total. A separate coverage applies if you cause damage
to someone else's vehicle or property. Suppose you have an accident and your vehicle damages
not only the other party's vehicle but a fence alongside the road.
Coverage for this is referred
to as Property Damage. You'll see a different limit for that on your policy. It's usually
one number, and it is the total your insurance company will pay for all property damaged
as the result of any one accident. Sometimes, insurance companies will put all three of
these numbers together.
If you see 250/500/100, it means your limits are $250,000 per person
for bodily injury, $500,000 total per accident for bodily injury, and $100,000 total for
property damage per accident. So what about protecting YOUR property? An auto insurance
policy can include coverage for damage to YOUR car by purchasing comprehensive and collision
coverage. Rather than a pre-determined limit, a loss to your vehicle is settled based on
its current value. Even when simplified, understanding your insurance policies is easier said than
done.
That's where your Independent Agent comes in! They are there to answer your questions
and help you understand which coverages and limits you need to protect you and your family.
To help you make the right choices, be sure to contact your local independent agent today!.
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