Understanding Insurance Policy Limits


Every insurance policy has limits. This is the maximum amount that the insurance company will have to pay. Automobile insurance limits are typically quoted as two numbers with a slash between them. For example, as of this writing, ORS 806.070 requires that an automobile policy issued in Oregon must have liability limits of at least $25,000 / $50,000.

The first number ($25,000) is the most that the insurance company has to pay to any one person in an accident. So if the person who caused the accident has $25,000/$50,000 limits, then his or her insurance company will never have to pay more than $25,000 in a claim.

The second number ($50,000) is the maximum amount the insurance company will ever have to pay for the accident. So if three people were hurt or killed in the crash, the company would never have to pay more than $25,000 to any one person, but they also would never have to pay more than $50,000 for all three people combined. Which means that each person could get less than $25,000. If the person runs into a bus and injures 50 people, each one may get an average of only $1,000 each, because the insurer never has to pay more than the $50,000 for the entire accident.

$25,000 / $50,000 is the minimum legal automobile policy limit in Oregon. Many people have more: $50,000 / $100,000, or $100,000 / $300,000, or even $250,000 / $500,000.