In today’s blog, I’ll answer the question, what are policy limits?
Any injury lawyer will tell you that, in order to have a successful personal injury claim, you have to have three things.
Number one, an at-fault driver or business.
Number two, damages in the form of measurable harms and losses suffered by the injured person.
Number three, money to make up for those losses.
This blog post is about the last point, money to make up for the losses. You may be wondering, how much money will the at-fault driver’s insurance pay to cover my injuries? This is a topic that can get complicated quickly because there several kinds of insurance that might come into play.
Let’s start with the basics.
Car Insurance basics
When somebody buys car insurance, it always comes with coverage for harm done because of negligence. We call that bodily injury or liability coverage. The policy limit is the dollar amount that represents the maximum amount of money the insurance company will pay for harm done to the injured person by the at-fault driver.
Example of policy limits
For example, let’s say you’re injured in a car crash and the at-fault driver’s insurance has a limit of $50,000.
Well then $50,000 is going to be the most money the insurance company will pay for the harms and losses done to you.
This is true, even if your medical care, lost wages and other harms and losses add up to much more than the policy limit. And it’s usually going to be true, even if a jury values your case at more than the policy limit.
Types of policy limits
Every insurance policy has a collection of coverages and each one will have its own limit. So you’re likely to see more than one limit in the same policy. For example, a common auto insurance policy might include coverages for liability or bodily injury, collision coverage or medical payments coverage.
And each of these will have its own separate limit.
Liability and bodily injury insurance
Each type of insurance is important, our focus today is going to be on the liability or bodily injury coverage because this is the money that pays you for all of the human harms and losses that you’ve suffered. That includes lost wages, medical bills, pain, suffering and all the other effects that you suffer as a result of a crash.
Every state has a minimum amount of insurance coverage that a driver must have, but this is just a starting point. Anybody can purchase more coverage. It’s not uncommon to see liability limits of $100,000, $250,000 or even more in some cases.
Vermont and New York minimum coverage requirements
In Vermont in New York, the minimum amount of liability coverage is $25,000 per person, with some important exceptions.
Here’s where it gets a little tricky.
is 25/50 liability insurance policies
The way the law is actually written in New York and in Vermont, is that it requires 25,000 per person and 50,000 per accident in coverage and that’s the minimum. When lawyers or insurance adjusters talk about this, we sometimes refer to it as a 25/50 policy situation.
What this means is that with the minimum coverage, if there are two people injured by negligence in the same collision, each of them can collect up to $25,000 for a total of $50,000 in the same accident.
Single Limit Policies
There are some policies that are written as what we call single limit policies. This means that there’s only one dollar figure (for instance $300,000.00) which is meant to cover everybody injured due to negligence in the same crash.
With single limit coverage, if there are several people who get hurt in the same crash, they may wind up fighting each other for a slice of the same pie, depending on how bad their injuries are.
Difference between a 25/50 and a single limit policy
In the case of a 25/50 policy though, two people injured in the same crash will never have to fight each other because they each have their own separate limit. But a third or fourth injured person from the same crash may wind up taking dollars from one of the first two.
What if my insurance policy limit doesn’t cover all my injuries?
What do you do if your injuries are so severe that $25,000, $50,000, or even $100,000 isn’t enough to cover all of your losses?
In many cases, the answer is that there’s nothing you can do about it.
Most people simply don’t have the money or assets to pay for the harm that they cause, beyond what their insurance will pay.
Finding additional insurance policies
A good lawyer will spend time and energy tracking down other at-fault parties and tracing insurance coverage that might apply.
And you may have under-insured motorist coverage that applies to this crash. These are topics that are beyond the scope of today’s conversation, but we will talk about them in an upcoming blog.
The main takeaways from today’s blog are these:
Number one: in New York and in Vermont, every driver must carry a minimum amount of liability coverage. That’s 25,000 per person up to 50,000 per collision, for harms caused due to that driver’s negligence.
Number two: if there are more than two people injured in the same crash, there’s a chance that some of those people may wind up fighting each other for the limited insurance dollars available.
Number three: if the value of your damages exceeds the policy limit of the at fault driver’s insurance, you’re going to have to look elsewhere for money and you may not find it.