Insurance terms and details about your policy can often be tricky to understand, yet it is important to know what your policy covers. One example of a confusing part of an auto insurance policy is the coverage for liability insurance. Liability insurance is vital to have, but it is also important to understand how the coverage of your policy works, and here are several things you should know about it.

What liability coverage is

Liability coverage is the most basic type of coverage you can purchase with an auto insurance policy, and it is the type of coverage that is required for state minimum coverage amounts. With liability insurance, you have coverage for situations in which you are responsible for a collision that causes damages to another car or injuries to other people. This is a type of coverage that protects you in a legal sense but does not protect your car or cover the costs of medical bills for yourself if you cause an accident and are injured.

What the three numbers mean

When you have liability coverage, it is very common for the insurance company to list the liability coverage amount in terms of three numbers. For example, your policy might state that the liability coverage limits are 100/300/50. Each of these numbers represents something different, and here is a breakdown of what these numbers mean:

  • 100 – The first number listed refers to the amount of compensation your policy offers for injuries per person injured, and the 100 refers to $100,000. If one person is injured, this is the maximum amount your policy will pay for the compensation.
  • 300 – The second number listed refers to the total amount your policy will pay out if other people are injured and have the right to file a claim on your policy. In this case, your policy would pay $300,000 at the most for medical bills for other people.
  • 50 – Finally, the third number you see is the maximum amount your policy covers for property damage. Property damage refers to damage to vehicle damage from an accident that you cause. In this case, your policy would pay a maximum of $50,000 for this.

You are free to choose any amounts for these, but it will cost more to increase your amounts.

If you are not sure if you have enough insurance or what your policy covers, talk to an auto insurance agent to learn more.