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Your auto liability insurance coverage will typically have three limits: bodily injury for each person, bodily injury for all persons involved, and property damage. Your insurance company will pay up to that established limit. If costs exceed your limit, you will have to pay out of pocket.

If you have a 30/60/15 policy, this means your insurance company will pay up to $30,000 for one person’s bodily injury costs, up to $60,000 for all bodily injuries in the accident, and up to $15,000 for property damage.

Note that some insurance companies issue “single limit” liability policies, instead of split limit policies. A single limit policy would cover the costs of injuries and property damage together, up to the total limit.

For example, a 300 policy would cover $300,000 of bodily injury and property damage liability combined after an accident.

If you cause a crash in which people are injured and the other vehicle is damaged or totaled, here is how your insurance will pay the costs if you have a 30/60/15 split limit policy:

  • Your liability insurance will pay up to $30,000 for any one injured person, including hospitalization, treatment and lost wages.
  • It will pay up to $60,000 for all injury costs if multiple people are injured.
  • It will pay up to $15,000 for all property damage you cause.

If the total costs of the accident amount to $100,000 for all injuries and lost wages, and $20,000 in property damage, the out-of-pocket costs you will be responsible to pay are:

  • $40,000 in bodily injury costs
  • $5,000 in property damage costs
  • Totaling $45,000 out of pocket

Based on your policy, you would have to pay $45,000 in out-of-pocket costs to cover your legal responsibility.

Unfortunately, many people purchase only the minimum liability coverage required by their state, leaving them exposed to enormous expenses if they cause an accident. Be sure to talk with your agent about the appropriate amount of liability coverage for your financial protection.

You may also want to consider an “umbrella policy,” which can provide excess liability coverage that can protect you if your legal responsibility in an accident far exceeds your auto liability coverage limits.