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Understanding Auto Liability Limits

Auto liability insurance provides coverage for costs you are legally required to pay if you cause an accident, injury or property damage. Liability insurance also helps to cover the costs of lawsuits arising from an accident.

Sometimes the easiest way to explain is through an example. Picture yourself driving down the road at about 45 mph. Your cell phone rings and you look down to see who is calling and to pick up the phone. When you look up, you realize the cars in front of you have come to a complete stop due to a car waiting to turn left.

You slam on your brakes to stop but it’s too late. You hit the car in front of you, which hits the two cars in front of him. Passengers in two of the vehicles are injured and all three cars are damaged. How does your insurance pay?

In our scenario, let’s say you have auto liability limits of:


The first number ($100,000) is the most that will be paid for any one injured person, including hospitalization, treatment, and lost wages.

The second number ($300,000) is the most that the policy will pay for bodily injury costs if more than one person is injured.

The third number ($50,000) pays up to that amount for the property damage you cause to the other person(s) vehicles or property.

If the total cost of the accident (including injuries, time in hospital, lost wages, and vehicle/property repairs) exceeds your amount of coverage, then you are responsible for paying the rest out of your own pocket (unless you have an umbrella policy). This is why we encourage you to carry the highest limits you can afford.

Unfortunately, many people purchase only the minimum liability coverage required by their state. In South Carolina, the minimum limits are $25,000/$50,000/$25,000, which is not enough to cover your potential risk. These low limits leave you exposed to enormous expense if you cause an accident.

We live in a litigious society, so we recommend that you secure the highest limits you can afford. Read on for our thoughts on “How Much is Enough?”