Understanding Auto Liability Limits

Insurance ClaimLooking over your policy or shopping for auto insurance, you will see auto policy limits listed in many different ways. One common way is 100/300/100 or BI 100/300 PD 100. If you are unsure what those numbers mean and would like a little information, this article is for you.

Auto Liability Limits

The liability limits on your auto policy covers bodily injury that you are/would be legally liable for in a court of law. An example of this would be running a red stop light and colliding with another vehicle. In this situation you would generally be found legally liable due to not following the rules of the road (aka you should have stopped at the red light). To make things simple we will all agree that you are at fault and a court has ruled so. In this instance you are now responsible for the other parties injuries (the other car you collided with).

Understanding limits of liability

We now will take a look at bodily injury liability limits. As indicated above you currently have 100/300 BI. These limits are $100,000 per person up to $300,00 per accident. Let’s say the other party suffered injuries of $100,000. In this instance your insurance policy covers you up to $100,000 per person so your policy would cover all expenses. If we take the same scenario and assume you had a policy of 25/50 then we now know that this would be $25,000 per person up to $50,000 per accident. If the other party suffered the same medical bills of $100,000 then your insurance policy would exhaust it’s limit of $25,000 and you would be responsible for the other $75,000.

The last number in 100/300/100 or 100 PD is your property damage limit.  This is the amount your insurance company will pay for property damage in the above accident due to your negligence.  The property damage limit works similarly to your bodily injury limit but it would handle the property side of things.


In the above scenario we assumed only one person was injured. Let’s add two other passengers to the vehicle for a total of 3 people. Let’s also assume each person had the same $100,000 medical bills. If we look at our 100/300 limits we can see that your policy will cover all of the medical bills for a total of $300,000. If we go back to the 25/50 limits we can see that this policy will cover each injured person up to $25,000 for a total of $50,000 per accident. Your policy would pay a total of $50,000 ($25,000 x 2) and this would leave a balance of $250,000 to be paid by you.

As you can see from the above examples, it is important to pick the correct liability limits for your situation.

The above example attempts to explain the basics of an auto insurance policy. This example does not represent all situations and does not account for any policy provisions that may prohibit payment in this situation. Please consult your policy for full details. Your policy is the deciding factor on all coverages.
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