You just got a letter that says the insurer is offering the "policy limits," or that the at-fault driver has "low policy limits." That means the maximum amount an insurance policy will pay for a covered claim. Once that cap is reached, the insurer usually does not owe more under that policy, even if the injuries, lost income, and other damages are much higher.

Policy limits matter most when a crash causes serious harm. A short hospital stay, surgery, rehab, or follow-up care can burn through coverage fast, especially after treatment at a trauma center like Banner University Medical Center in Phoenix. If the available insurance is lower than the full value of the case, a person may need to look at other sources of recovery, such as underinsured motorist coverage, another liable party, or the at-fault person's personal assets. In negotiations, "tendering limits" usually means the insurer is offering the full amount available under the policy.

In Arizona, minimum auto liability coverage increased under Senate Bill 1087 in 2020 to $25,000 for bodily injury to one person, $50,000 per accident, and $15,000 for property damage. Those are only minimums, not guarantees that a claim will be fully covered. When damages exceed policy limits, issues like bad faith, settlement, and liability become especially important.