Insurance policy limits are the maximum amount the insurance company has to pay out for damages caused by a covered loss under the applicable insurance policy. This applies even if the amount of damages is more than the insurance policy limits. For example, the minimum policy limits for an auto liability policy in Texas are $30,000 per person/$60,000 per accident for personal injury damages and $25,000 for property damage. This is the full amount of auto insurance that a driver is required to have by law. You may see this commonly written as a “30/60/25 policy.”
If an individual with minimum liability policy limits causes a wreck and the resulting damages exceed the policy limits, the owners of the damaged property would still only be entitled to collect the minimum policy limits from the insurance company of the person at fault.
What if I have damages more than the at fault driver's policy limits? Can't I just try and recover the rest from the at fault driver?
The simple answer is no.
This is why drivers carry car insurance. The fact is drivers buy auto insurance because they don't have sufficient assets or financial means to meet the minimum financial responsibility. Texas drivers choose to purchase insurance either because they don't have the assets to establish financial responsibility through other methods, or because buying insurance makes more financial sense in light of their assets, debts, and financial obligations.
Any settlement reached with an insurance company by a person who was injured or whose property was damaged will be required to sign and execute a release. The release does just that - It releases the at fault driver from further liability. This is the purpose of liability insurance- it protects the insured's assets by providing a defense (insurance adjusters, lawyers to defend the claim and evaluate it) and under terms that the insurance company will pay out in exchange for a full release of any further legal obligations against the at-fault individual.
I was in a car accident in Houston. The at fault driver has a “30/60/25 policy.” How does that work?
Let's assume you were the only passenger in the vehicle at the time…If this where the case, the most the at-fault driver's insurance company is obligated to ever pay you for injuries sustained is $30,000. This is because his limits are $30,000 per person.
Now, let's assume there were two people in your car…The most the at-fault driver's insurance company is obligated to pay is $60,000 because the limits are “$60,000 per accident.” Thus, the most they could pay you is $30,000 and the most they could pay your passenger is $30,000 (the per person limit).
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These issues can greatly affect the value and ultimate financial recovery an injured driver gets from the insurance company of the at-fault driver. You will need experienced car accident attorneys to navigate this process. The Houston Car Accident Attorneys at Hernandez Redden Sunosky, LLP have the experience and knowledge necessary to navigate your claim and lawsuit, if necessary. Please call us for free consultation at (713) 981-4100 or email your questions to: [email protected]