Understanding Liability Insurance Limits and What They Mean

When you purchase auto insurance, you are buying a promise of financial protection. The core of that protection is your liability coverage. This is the part of your policy that pays for the injuries and property damage you cause to other people if you are at fault for an accident. But this protection is not a blank check.

The amount your insurance company will pay is limited to the specific “policy limits” you chose when you bought your policy. These limits are the absolute maximum amount the insurer will pay out on a claim. Understanding what these limits are, how they work, and the serious financial risk of having limits that are too low is one of the most important things any responsible driver can do.

Too often, drivers in Washington only realize their coverage is dangerously inadequate after a serious accident has already happened.

Useful Information for You: In a Nutshell

• Liability Coverage Pays for the Harm You Cause: It covers the other party’s medical bills, lost wages, vehicle repairs, and pain and suffering.
• Policy Limits are the Maximum Payout: Your insurer will not pay a penny more than your selected policy limits.
• Washington’s Minimum Limit is 25/50/10: The state legally requires a minimum of $25,000 for bodily injury to one person, $50,000 for total bodily injury per accident, and $10,000 for property damage.
• The Minimum is Not Enough: These minimum limits are dangerously low and can be exhausted by even a moderate accident, exposing your personal assets to a lawsuit.
• You are Personally Responsible for the Excess: If you cause damages that exceed your policy limits, the injured party can sue you personally for the remaining amount.

Decoding the Numbers: What Does 25/50/10 Mean?

When you look at your insurance policy, you will see your liability limits expressed as a series of three numbers. The minimum required in Washington is 25/50/10. Here’s what each number represents:

$25,000 – Bodily Injury Liability Limit per Person

This is the maximum amount your insurance will pay for the injuries of any one single person you harm in an accident.

$50,000 – Bodily Injury Liability Limit per Accident

This is the total maximum amount your insurance will pay for injuries for all people combined in a single accident. If you injure three people, this is the total pot of money available to them, with no one individual receiving more than the $25,000 per-person limit.

$10,000 – Property Damage Liability Limit per Accident

This is the maximum amount your insurance will pay to repair or replace the other person’s property that you damaged. This is primarily their vehicle, but it could also include things like a fence or a mailbox.

The Danger of Minimum Limits

In today’s world, the state minimum limits are frighteningly inadequate.

• A single trip to the emergency room with a CT scan can easily exceed $25,000.
• The average cost of a new car is over $40,000. The $10,000 property damage limit won’t even cover the cost of totaling a used sedan.

What happens if the damages exceed your limits?

Let’s say you have a minimum 25/50/10 policy and you cause an accident that results in $60,000 in medical bills for the other driver and $15,000 in damage to their car.

• Your insurance will pay the first $25,000 of their medical bills (the per-person limit).
• Your insurance will pay the first $10,000 of their car repairs (the property damage limit).
• You are now personally responsible for the remaining $35,000 in medical bills and $5,000 in car repairs.

The injured party can and will sue you personally for that remaining $40,000. This can put your savings, your home, and your future wages at risk. This is why insurance experts almost universally recommend that drivers carry liability limits far higher than the state minimum—often suggesting at least $100,000/$300,000/$100,000.

How This Affects You as a Victim

Understanding policy limits is also crucial when you are the victim. The amount of the at-fault driver’s liability coverage is the pool of money available to compensate you. If their limits are too low to cover your serious injuries, this is precisely when your own Underinsured Motorist (UIM) coverage becomes your most important safety net.

If you’ve been in a car accident in the Tacoma area and are dealing with the complexities of insurance policy limits, search the Car Accident Lawyer Directory Tacoma. An experienced local attorney can quickly investigate all available coverages and fight to ensure you receive the maximum compensation possible.

References

• Washington State Office of the Insurance Commissioner (OIC) – Bodily injury liability coverage:The official consumer guide from the OIC, explaining what liability coverage is and the minimum limits required by Washington State law.https://www.insurance.wa.gov/what-bodily-injury-liability-coverage
• Washington State Legislature – RCW 46.29.090 – Requirements as to policy or bond:The official state law that establishes the minimum liability insurance limits (25/50/10) required for drivers in Washington.https://app.leg.wa.gov/rcw/default.aspx?cite=46.29.090
• Washington State Department of Licensing (DOL) – “Insurance requirements”:The DOL’s public-facing guide that clearly states the mandatory minimum insurance coverages for all drivers.https://www.dol.wa.gov/driver-licenses-and-permits/insurance-requirements