To drive a car, you are required to have liability insurance. You go to your local agent and purchase an insurance policy, but do you know what you are buying?

The liability coverage pays for injuries or property damage to others when you are at fault in an accident. The liability section is the most important part of the auto policy because it protects your financial security. The liability coverage is generally divided into 3 sections. For this article we will discuss the liability limits of $100,000/$300,000/$100,000.

If you have these limits it means that if you are at fault in an accident the most the insurance company will pay a single person injured in the accident is $100,000. The second number states the maximum amount that will be paid out for injuries no matter how many people are involved. In this case it is $300,000; so if there are 2 people or 10 people injured, they must all share the $300,000 limit with no one person receiving more than $100,000 as described previously.

The last number indicates the maximum amount that the insurance company will pay for property damage to all others when you are at fault in an accident. This damage could be to a building, a sign, a car, or any other type of property. In this example, the maximum is $100,000 that the insurance company would pay for all property damage done in the accident.

If you are at fault in an accident and the other person’s injuries or property damage exceed the liability limits on your auto policy, the injured party can seek reimbursement directly from you. For example, assume that you fail to stop at a stop sign and collide with another vehicle. The injuries to the other party total $150,000, but the limits on your auto policy are $100,000 per person. The injured party can seek reimbursement directly from you for the additional $50,000. This is why it is important to make sure you have adequate liability limits.

To learn more about Jason, please visit his website at http://www.jasonNbusch.com.