I understand that deciphering auto insurance policy limits can be a daunting task for individuals involved in accidents. It's crucial to comprehend the nuances of these limits to ensure you receive fair compensation for your injuries and damages. I'll break down the intricacies of auto insurance policy limits, focusing on common formats like 25,000 / $50,000 limits, prevalent in New Mexico.
Understanding Policy Limits
Auto insurance policy limits are the maximum amount an insurance company will pay for covered losses in an accident. They typically consist of two numbers separated by a slash, such as $25,000 / $50,000. These numbers represent different aspects of coverage:
- Per Person Limit: The first number signifies the maximum amount the insurance company will pay for injuries sustained by one individual in an accident. In the example $25,000 / $50,000, this limit is $25,000 per person.
- Per Accident Limit: The second number denotes the maximum total amount the insurance company will pay for all injuries and damages resulting from a single accident. In the example, this limit is $50,000 for the entire accident.
It is easiest to explain this using some examples.
Example Scenario #1
Imagine you're involved in a car accident where the at-fault driver's insurance policy has limits of $25,000 / $50,000. If you're the only person injured in the accident and your medical expenses amount to $30,000, here's how the insurance coverage would apply:
- Since your expenses exceed the per-person limit of $25,000, you're entitled to receive the full $25,000 from the at-fault driver's insurance policy.
- However, even though the total available for the entire accident is $50,000, the insurance company will not cover the remaining $5,000 of your medical expenses because the per-person limit is only $25,000.
- The $50,000 limit would only apply if there were multiple claimants.
Example Scenario #2
Imagine a scenario where you're involved in a car accident with two passengers in your vehicle, and the at-fault driver's insurance policy has limits of $50,000 / $100,000. Here's how the insurance coverage would apply in this situation:
Per Person Limit: The per-person limit of $50,000 means that each individual injured in the accident can potentially receive up to $50,000 in compensation for their injuries.
Per Accident Limit: The per-accident limit of $100,000 signifies the maximum total amount the insurance company will pay for all injuries and damages resulting from the accident.
- Driver's Injuries: Your medical expenses amount to $40,000.
Since your expenses fall within the per-person limit of $50,000, you're entitled to receive the full $40,000 from the at-fault driver's insurance policy.
- Passenger's Injuries: The passenger sustains injuries with medical expenses totaling $70,000.
Since the passenger's expenses exceed the per-person limit of $50,000, they are eligible to receive only up to $50,000 from the at-fault driver's insurance policy.
However, since the total policy limits available for the entire accident is $100,000, there is sufficient coverage to compensate the driver ($40,000) and passenger ($50,000) up to the per-accident limit. (In this example, it combined to total $90,000).
Note – had there been another victim involved with $30,000 in damages, the total per accident limits of $100,000 would have to be pro-rated among the three victims because the $100,000 would not cover everyone’s damages.
Implications for Car Accident Victims in New Mexico
Understanding auto insurance policy limits is crucial for accident victims seeking compensation.
Here are some key implications to consider:
- Coverage Adequacy: Assess whether the at-fault driver's policy limits are adequate to cover your medical expenses, property damage, and other losses resulting from the accident.
- Stacking and Uninsured/Underinsured Motorist Coverage: In New Mexico, drivers have the option to "stack" coverage from multiple insurance policies or opt for uninsured/underinsured motorist coverage to protect themselves in cases where the at-fault driver's policy limits are insufficient. This can get confusing, so don’t focus on trying to understand that completely. Just know that Uninsured/Underinsured Motorist Coverage can help cover you if the other driver’s insurance limits are insufficient to cover all your damages.
Recover the Compensation You Deserve By Contacting Our New Mexico Personal Injury Attorney Today
Navigating auto insurance policy limits is a crucial aspect of securing fair compensation for injuries and damages resulting from car accidents in New Mexico. By understanding the per-person and per-accident limits of an insurance policy, accident victims can make informed decisions and seek appropriate legal recourse when necessary. Remember, seeking guidance from an experienced New Mexico personal injury attorney can greatly assist in navigating the complexities of insurance claims and maximizing your recovery.
Our dedicated personal injury team here at The Injury and Disability Law Center is here to help you. Schedule your free initial consultation today by calling our office at 575-300-4000, starting a chat, or filling out our online form.
If you want even more information, feel free to download my free book, Car Accident Cases Made Simple(r), where I discuss this topic and more.