Per Person Limit

The purpose of car insurance is to provide drivers with financial protection should they be involved in a motor vehicle accident, or if their vehicle is damaged in one of several other ways. The cost of car repairs and medical bills can be extensive, and without car insurance, a driver runs the risk of having to pay any incurred expenses out of pocket, especially if they have been found to be responsible. Although drivers are expected to read their car insurance policy thoroughly, many neglect to peruse the entire document. Because of this, many people don't realize that there are limits on the amount of coverage that is provided. If involved in an accident, an insurance policy clearly states that there are per accident, per occurrence, and per person limits on coverage.

It is important to understand what each of these terms mean so that a driver is not caught unaware if an insurance company only agrees to pay a specific amount. A per accident limit is the maximum amount that an insurance company will pay out for damages sustained by more than one person per accident. If four people are injured in one accident, and the policy limit is $200,000, the most the policy will pay in total is $200,000. If the total amount of damages exceeds the stated policy limits, then the payment may be divided between all parties.

A per occurrence limit is common in policies that cover rental cars. For example, a car insurance policy may pay out a total of $50 per day up to a maximum number of days if a policyholder's vehicle is in the repair shop following an accident or claim. This coverage is called loss of use.

A per person limit is a set amount that an insurance company will pay out for damages or injuries sustained by one person. For example, if a car insurance policy has a limit of $200,000, the most it will pay for each person injured in an accident is $200,000. If four people are injured in the same accident, the policy will pay this amount for each person. If the amount of damages or injuries exceeds this amount, then the driver may have to pay out of pocket for the outstanding expenses.

Reading a car insurance policy in its entirety is necessary in order to fully understand exactly what the insurance company is willing to cover, and what exclusions are in place. Asking questions and clarifying any concerns with an insurance agent is also helpful. By following these two steps, a driver will not be surprised by extra expenses or limits in coverage.

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