The maximum an insurance policy will pay - and usually the real ceiling on what a claim is worth, whatever the injury.
Every liability policy states a maximum. The limit is the insurer's promise, and it is unrelated to the size of the harm: a driver carrying the minimum required by their state can cause a catastrophic injury and the policy still pays only its limit. Because most individuals do not have significant assets beyond insurance, the limit is very often the practical value of the claim, and finding out what it is early changes how a case should be run.
Limits are usually written as two or three numbers. A split limit such as a per-person figure, a per-accident figure and a property damage figure means the per-person amount caps what any one injured person recovers even if the per-accident total is higher. A combined single limit is one pot for the whole accident. A separate aggregate limit, common in business and professional policies, caps everything paid during the policy period rather than per claim.
Two mechanics regularly surprise people. First, in many liability policies defence costs are paid in addition to the limit, but in some - often professional liability and directors' policies - defence costs erode it, so every month of litigation reduces what is left for the claimant. Second, states set only a minimum required liability limit for drivers, and those minimums are in several states very low relative to the cost of a serious injury; that gap is what uninsured and underinsured motorist coverage on your own policy exists to fill.
Whether the other side's limits can be discovered before suit is filed depends on the state. A number of states require an insurer, on request and subject to conditions, to disclose the liability limits of its insured to a claimant; elsewhere the information may not be obtainable until formal discovery. Where several policies apply - a personal policy and an umbrella, an employer's policy where the driver was working, a vehicle owner's policy separate from the driver's - the total available may be considerably larger than the first number quoted, and identifying every applicable policy is a distinct piece of work.
A demand for the full limit is a specific and consequential move rather than a negotiating flourish. If an insurer refuses a reasonable within-limits demand and its insured is later found liable for more, the insurer may be exposed for the excess - the third-party bad faith scenario. That prospect is what gives a properly made limits demand its force, and it is also why the terms and timing of such a demand are worth getting right.
Establishing what coverage exists is one of the highest-value early tasks in any injury claim and it is largely invisible work: identifying every policy that might respond, including umbrella coverage, an employer's policy if the person was working, and your own underinsured motorist coverage, which is frequently the largest source available and is frequently forgotten because it means claiming against your own insurer. If you are the person insured and a claim against you looks like it may exceed your limits, that is a moment to get independent advice rather than relying solely on the lawyer your insurer appointed. And before buying insurance at all, the cheapest version of this advice is simply to compare your liability limit against what a serious injury actually costs.
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