What is an Insurance Coverage Limit?

Every insurance policy sold in Alabama is a contract and every contract has terms. Policy limits are the max amount of money that the insurance company is going to have to pay out on your behalf if you injure somebody in an auto accident.

In Alabama, we have what’s called a minimum policy whereby any insurance policy sold in Alabama has to cover at least $25,000  to $50,000. That first number, $25,000, is the max amount of money the insurance company is going to have to pay out on your behalf if you injure someone no matter how badly injured they are or even if you killed them. If you have a minimum policy your insurance company is only going to pay out twenty-five thousand dollars to that person. The second number, $50,000, is the amount of money your insurance company will have to pay out on your behalf on any one accident regardless of how many people are injured so let’s say you hit a school bus full of children and ten of those children on that bus are seriously injured, the max your insurance company is going to pay out between all ten of those children is fifty thousand dollars. So if you’re riding around with a minimum policy in Alabama you might want to consider bumping it up to something a little bit higher because $25,000 is not a lot of money if you’ve seriously injured yourself.