How Auto Liability Limits Work

When purchasing auto coverage, you will choose liability limit caps. These are typically listed in a 3-tier structure called split limits, such as 50/100/25 or 100/300/50. Let's deconstruct what these figures actually represent.

Deconstructing Split Limits

If your policy lists split limits of 100/300/50, the limits represent the following caps in thousands of dollars:

• $100,000 Bodily Injury Per Person: The maximum amount the insurance company will pay for medical costs, lost wages, and pain/suffering to a single injured individual in an accident you cause.
• $300,000 Bodily Injury Per Accident: The maximum cumulative amount the insurer will pay for all injured parties combined in a single accident you cause.
• $50,000 Property Damage: The maximum amount the insurer will pay to repair or replace property damaged in the accident (such as other vehicles, fences, or structures).

Understanding the Risk of Low Limits

Most states set legal minimum limits that are low (e.g. 25/50/25). If you cause an accident that results in severe injury or totals an expensive vehicle, medical costs and vehicle repair bills can easily exceed state minimums. In these scenarios, you are personally liable for paying any remaining balance once your insurance caps are exhausted. Many advisors recommend choosing higher caps like 100/300/50 to protect personal savings.