Written by attorney James M Terry Jr.

Understanding Your Car Insurance - Liability Limits

If you didn't already know, as of January 1, 2011, the minimum liability limits for auto insurance in Texas increased. The new minimum liability policy is now a 30/60/25 policy. Have you ever wondered what those numbers mean? I have learned that most people have no idea what they mean. Keep reading and I'll tell you.

Auto liability insurance is required under state law and the new minimum will be 30/60/25. The "30" stands for the per person limit of $30,000. The "60" stands for the the per occurrence limit of $60,000. The "25" stands for the property damage limit of $25,000. If you have a 30/60/25 policy, that would be the maximum your insurance company would have to pay on your behalf. Ok, but what does it mean, right?

Well, the easiest way to explain it is through an example. Let's say you're driving along and you run a red light crashing into a BMW 750 LI (an expensive car!). In that car are three people heading to lunch (Dan, Trent, and Charles), and all three are injured. All three require medical attention (they were all taken to the hospital by ambulance and had a bunch of MRIs to make sure they were alright). This would be called an "occurrence."

You have a 30/60/25 policy - the new minimum required. It means that no single person in the BMW can recover more the $30,000 from your insurance carrier, but all three of them are limited to $60,000. In other words, Dan could recover $30,000 ( the "per person" maximum) but Trent and Charles would have to share the remaining $30,000 (the "per occurrence" maximum). And then, your insurance company would pay up to $25,000 to fix the BMW. Make sense?

When you purchase insurance, you have a choice on the amount of coverage. I know that financial consideration is a big factor when it comes to purchasing insurance. But, believe it or not, it does not cost much more to increase your liability limits and I recommend that you at least check into it. Besides protecting yourself from liability, you want to make sure that you have enough coverage so that your insurance company will pay to fix that BMW 750 LI.

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