What does "liability limits" refer to in a Personal Auto Policy?

Liability limits in a Personal Auto Policy refer to the maximum amount the insurance company will pay for losses or injuries resulting from an accident where the insured is found to be responsible. This is a crucial aspect of the insurance policy because it defines the extent of the coverage provided to the insured. If the damages or injuries exceed these limits, the insured would be personally responsible for paying the remaining amounts.

Understanding liability limits is essential as they not only determine how much protection a driver has in case of an accident but also influence the premiums. Higher liability limits typically result in higher premiums, reflecting the increased risk the insurer undertakes.

Other choices do not accurately represent the concept of liability limits. The minimum amount an insured must pay in the event of an accident is not related to liability limits but to other aspects like deductibles. The deductible represents the amount the insured is responsible for before insurance kicks in, not the maximum payout. Additionally, the total cost of the insurance policy encompasses premiums and other fees but has no direct correlation with the limits on liability coverage.