Auto Insurance Coverage Limits Explained

Top FAQs for Auto Insurance Coverage Limits Explained

Auto Insurance Coverage Limits Explained

Learn more about your auto insurance coverage by diving into all things limits.

Coverage limits are the maximum amount a car insurance policy will pay after a covered accident. Once that limit is reached, you’re responsible for paying the rest of the cost out of your own pocket.

That can be a hard pill to swallow if you are in a large accident where bills add up quickly. That's why it’s important to understand exactly how auto insurance coverage limits work and to review your policy occasionally to make sure you’re comfortable with the limits you have. Some prep up front can help save you from the headache and uncertainty after an accident. This article will help explain the different coverage limits at work in a typical auto insurance policy.

Liability Coverage is required in every state. This coverage helps you pay for property damage, medical expenses, and other damages to another person and their vehicle that you are legally obligated to pay when you cause an accident.

It’s broken down into two parts: Bodily Injury and Property Damage. Bodily Injury helps pay for covered medical expenses, lost wages, compensation for pain, and more for another driver and their passengers. Property Damage helps cover damages to, you guessed it, their property.

Auto liability coverage limits are typically written out as three numbers like 25/50/25. That means you have a $25,000 limit per person for Bodily Injury in an accident, a $50,000 total limit per accident for Bodily Injury, and a $25,000 limit per accident for Property Damage.

Preview

Auto Insurance Coverage Limits Explained

Category: An Automobile Insurance Policy Refer To The Maximum Amount The Policy Will Pay In Case Of An Insured Accident

Here’s everything about auto insurance coverage limits explained. Learn how they apply to bodily injury liability and property damage, along with the cost and how much you should carry.

An auto insurance policy protects you from financial loss in the event of a car accident or theft under a contract between you and the insurance company. The insurance company pays your losses based on the terms of your policy in exchange for you paying the premium.

It is almost universal that personal auto insurance is mandatory in the United States, although the method of enforcing that requirement differs from state to state. The type of coverage you choose for auto insurance will depend on your budget and needs.

The policies are generally valid for six months or one year, with the option to renew them. If you need to renew the policy and pay the premiums, you’ll receive a notice from your auto insurance company. It’s also important to understand what a limit is. The insurance coverage limit is a set of guidelines given by the insurance company detailing the maximum payout for a covered claim.

The coverage limits of an automobile insurance policy refer to the maximum amount the policy will pay in case of an insured accident. After this limit has been reached, you must take responsibility for the cost of the remaining portion.

In a significant accident, where the medical bills rack up quickly, this can be a hard pill to swallow. To ensure that you’re comfortable with the limits in your auto insurance policy, it’s crucial to understand how the limits work and to review them from time to time. You can avoid headaches and uncertainty after an accident if you do some preparation beforehand. This article will describe the different coverage limits at work in most auto insurance policies.

Preview

Auto insurance basics—understanding your coverage | III

Category: Auto Insurance

The basic personal auto insurance mandated by most U.S. states provides some financial protection if you or another driver using your car causes an accident that damages someone else’s car or property, injures someone or both.

But to make the best decisions about purchasing other types of auto insurance coverage you might need, you’ll want to understand what’s covered, what’s not covered and what’s optional. In addition to understanding types of coverage, you’ll also want to consider coverage amounts.

Here’s a rundown of the types of coverage available—some are required; others are optional; all are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.

Property Damage Liability — This coverage will reimburse others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole.

Uninsured Motorist Coverage — Reimburses you when an accident is caused by an uninsured motorist—or in the case of a hit-and-run. You can also purchase under insured motorist coverage, which will cover costs when another driver lacks adequate coverage to pay the costs of a serious accident.

Preview

Auto Insurance Policy Limits: How to Determine the Applicable Insurance Limits

1:11 - 2 years ago

Attorney Scott Poisson provides a summary of how to interpret auto policy bodily insurance limits. If you have any questions, ...

Auto Insurance Liability Limits Explained: How Much Do …

Oct 24, 2019 · Auto Insurance Liability Limits Explained. Auto insurance liability limits are decided between you and your insurance provider. In simple terms, …

Preview

Auto Insurance Coverage Limits Explained | AutoInsuranceApe.com

Some states have policies that place a minimum as well as a maximum on the amount of insurance you can purchase for your car. You'll find that in 48 out of the

Some states have policies that place a minimum as well as a maximum on the amount of insurance you can purchase for your car. You’ll find that in 48 out of the 50 states, there exists a minimum amount of auto insurance required for you to be allowed to drive. If you get into an accident with no insurance or a policy that falls below the state minimum, you could be facing legal issues.

The opposite is true for some states, a maximum amount of coverage is available. If the policy exceeds this maximum amount, the insurance company could get into trouble as they are breaching the state’s policy. So, what does this mean for you, the consumer? Well, it means you’ll have to better organize the amount of coverage you’re getting from a policy. You’ll need to determine what coverage options are important and what can fall by the wayside.

How do you know what limits exist in your policy? Well, these limits will differ based on the state you’re purchasing the policy in. Whatever insurance company you’re purchasing from should know by heart the maximum amount of coverage you’re allowed to purchase. You can also do research into state regulations and discover the maximum amount you’re allowed to pay for insurance.

These limits are rarely that restricting, oftentimes you’ll find that you won’t want a policy that reaches those limits in most aspects. Your standard car insurance policy will fall somewhere in the middle of the cost spectrum and should provide ample coverage to keep you protected from financial ruin resulting from an accident.

Some policies are organized in a way that you can pick and choose how much coverage you pay for in varying parts. For example, you might purchase the maximum amount available for liability coverage but take a lower-priced option somewhere else.

Preview

Auto Insurance Coverage Explained: Complete Guide to Policies and Terms - Auto Insure Savings

Category: Auto Insurance Coverage Explained

Understanding car insurance coverage can be complicated. Here you will find a complete guide explaining auto insurance coverage — from liability coverage and deductibles to collision and comprehensive coverage.

Having auto insurance coverage explained in plain and simple terms is helpful as you're shopping around or selecting policy options. Automobile insurance is designed to protect you and other drivers from financial liability in the event of an accident. Most states require basic liability coverage to protect other drivers if you're at fault, but comprehensive, collision, and medical payment coverages may also be useful.

Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florid...

Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Preview

Car Insurance Coverage Limits | DMV.ORG

Category: Maximum Amounts Of Money That Your Car Insurance Will Pay Out If You Make A Claim

Several factors determine you much car insurance you need. Learn how to find the right limits for you.

Take some time to understand your car insurance limits and coverages and decide how much you need, so you don’t realize after you get in an accident that it wasn’t sufficient.

All states require a minimum amount of car insurance for you to drive legally. Most states have minimum requirements for liability insurance, which pays for the other driver’s injuries (and those of his passengers), as well as vehicle damage to his car.

Some states are considered no-fault states and have no-fault insurance, or personal injury protection coverage (PIP insurance). That means that, regardless of who causes the accident, your insurance company will cover your injuries after an accident.

No-fault laws were imposed to allow drivers to get their medical bills paid right away, instead of having to wait for the completion of a full accident investigation by the car insurance companies.

Assets: If you have a high net worth, you might want to increase your coverage limits. If you cause an accident, the other driver can go after you in court to obtain money beyond what your insurance company pays.

Preview

Car Insurance Coverage Explained | Erie Insurance

Category: Car Insurance Coverage Explained

An auto policy from Erie Insurance goes beyond standard coverage with loads of extra protection features, giving you benefits you won’t always find in other typical policies.

An auto policy from Erie Insurance goes beyond standard coverage with loads of extra protection features, giving you benefits you won’t always find in other typical policies. Learn about what benefits are already built in (plus, how you can customize your auto coverage for even more personalized protection).

If you cause an accident and other people are injured due to your negligence, bodily injury liability coverage helps protect you against any claims for damages, such as medical expenses, lost wages, and pain and suffering.

If you or others covered on your policy are injured in an accident in your vehicle, there’s a coverage that reimburses for medical treatment. It’s called medical payments coverage or personal injury protection (optional in some states).

Uninsured or underinsured motorist coverage (optional in some states) is for your protection. If you’re injured by a hit-and-run driver or a driver who does not have auto liability insurance, you’re covered by uninsured motorist coverage. Underinsured motorist coverage pays when the other person doesn’t have enough coverage to cover the entire cost of your injury claim.

Collision coverage is used when your car collides with another car or object or flips over. So, if you have a newer vehicle, are on a lease or still owe on your car loan, you’d likely want both comp and collision.

Preview

Understanding Auto Liability Limits (Coverage Per Person, Per Accident) - Spotlight Insurance

Category: Auto Insurance

There’s a maximum amount that your insurer can pay for a covered incident on your auto liability policy. This figure is the coverage limit.

There’s a maximum amount that your insurer can pay for a covered incident on your auto liability policy. This figure is the coverage limit for the specific event. If the cost of the covered accident exceeds your policy’s coverage limit, you’ll have to pay for the extra liability out of pocket.

It’s important to understand how car insurance liability limits work. Also, figure out the best way to maximize coverage and minimize the risk of a financial loss if you’re ever held liable for an auto accident. Read on to learn more.

To legally drive in any state, you should meet the minimum auto liability coverage requirement. A typical coverage limit is expressed in three numbers, such as 25/50/25. If these are the figures on your auto liability policy, your coverage limits work out as follows:

Assume your existing auto liability coverage limits are $25,000/$50,000/$25,000, as explained above. If you got involved in an at-fault accident and three people got injured, your policy would pay for their medical bills, wages, and other losses only up to $50,000. If the total treatment cost for the three is $76,000, you’d have to pay for the extra $26,000 out of your own pocket.

A recent study showed that about 13% of drivers don’t have auto liability insurance. Uninsured coverage could help pay for your car repair and medical costs if you got injured in a car accident caused by one of these drivers. Some states require motorists to have this coverage, but you should consider having it even if it’s not mandatory where you live. The limits for this coverage are also expressed in numbers such as 25,000/50,000.

Preview

25/50/25: What Do the Three Numbers on Your Car Insurance Mean?

You see three numbers on your car insurance after you sign up for auto coverage. But what do they mean? Find out with Compare.com.

At Compare.com, it’s our mission to find simple ways to help our customers save money on the things they need. While we partner with some of the companies and brands we talk about in our articles, all of our content is written and reviewed by our independent editorial team and never influenced by our partnerships. Learn about how we make money, review our editorial standards, and reference our data methodology to learn more about why you can trust Compare.com.

Your car insurance policy usually lives in a safe place in your car and only comes out to make an appearance after a collision or other emergency. If you’ve taken the time to get acquainted with your auto insurance card, you’ll notice a set of three numbers separated by a dash or forward slash. They might look like this:

In short, these three numbers represent the limits of your auto insurance coverage. They indicate the maximum amount your car insurance company will pay out for bodily injury and property damage claims.

Liability car insurance is a crucial part of every car insurance policy. Let’s say you are involved in a collision where you are at fault. Liability insurance kicks in to cover the other driver’s costs or other passengers in the vehicle.

Almost every state has a minimum level of liability coverage that every driver must have before driving a vehicle. In some cases, you’ll need this coverage before you’re allowed to drive a new car off the lot.

Preview

What Are Insurance Policy Limits?

Category: Tell You The Maximum Amount Your Insurance Will Pay For Claims On Each Type Of Coverage You Carry

Insurance policy limits are the maximum an insurer will pay for a particular type of coverage. Learn how policy limits work and what to consider when setting them.

Jessica Walrack is a personal finance writer who has written hundreds of articles about loans, insurance, banking, mortgages, credit cards, budgeting, and general personal finance over the past five years. Her work has appeared on The Simple Dollar, Bankrate, and Supermoney, among other publications.

Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California Life, Accident, and Health Insurance Licensed Agent, and CFA. She spends her days working with hundreds of employees from non-profit and higher education organizations on their personal financial plans.

Insurance policy limits tell you the maximum amount your insurance will pay for claims on each type of coverage you carry. If you incur additional expenses after your insurance pays up to the limit, you can be held personally responsible. In some cases, you can choose a policy’s limit. Other times, you may need to meet minimum requirements set by the government or another party to get the limit you want.

For example, most states require you to have a minimum amount of auto insurance coverage. Therefore, your insurance policy limits must be equal to or greater than those legal limits. The New York State Vehicle and Traffic Law, for instance, requires the following minimum policy limits:

Liability insurance (bodily injury and property damage): $25,000 for bodily injury of one person, $50,000 for injuries resulting in the death of one person, $50,000 for bodily injury of two or more people in one accident, $100,000 for injuries resulting in the death of two or more people in any single accident, $10,000 for property damage liability per accident.

Preview

Insurance Limits: Auto & Home | Progressive

Category: Car Insurance Limits Explained Auto Insurance Car Insurance

Learn more about insurance limits, or the maximum your insurer can pay out for a claim. Find out how insurance limits work for auto and home insurance policies

Also known as your coverage amount, your insurance limit is the maximum amount your insurer may pay out for a claim, as stated in your policy. Most insurance policies, including home and auto insurance, have different types of coverages with separate coverage limits.

When you get a quote for a new insurance policy, the agent or insurer may pre-select the coverage limits or present you with a few options. Insurance limits on your policy determine the maximum amount your insurer may pay out for claims in each coverage category. Generally, a higher coverage limit means a more expensive insurance premium, and vice versa.

When selecting insurance limits, consider your specific situation in terms of risk and budget. If you have a family member prone to fender benders, for example, you might consider a higher liability coverage limit on your auto policy.

In the U.S., most states require a minimum limit for liability coverage on an auto insurance policy. Liability coverage limits on car insurance are typically shown as three separate numbers. If you carry auto insurance with liability coverage limits of $50,000/$100,000/$30,000, those numbers are broken down as follows:

For other types of auto insurance coverage such as comprehensive and collision, your insurance limit is often the cash value of your car, which usually takes into account the vehicle's depreciation. Although non-liability coverages aren't typically mandated by states, collision and comprehensive coverage may be required by the lender if you're leasing or financing your vehicle.

Preview

Six Types of Car Insurance Coverage

Car insurance is meant to protect financially you if you're involved in an accident. Learn about six types of car insurance coverage and what they do.

Charlene Rhinehart is an expert in accounting, banking, investing, real estate, and personal finance. She is a CPA, CFE, Chair of the Illinois CPA Society Individual Tax Committee, and was recognized as one of Practice Ignition's Top 50 women in accounting. She is the founder of Wealth Women Daily and an author.

An automobile insurance policy can protect you against financial losses if you're involved in an accident. Auto policies consist of several types of coverage, often six in total. Depending on the state where you live, some of these coverages may be mandatory, while others will be optional.

Bodily injury liability insurance is designed to pay medical expenses for someone else if you injure them in an accident where you're deemed to be at fault. This coverage can apply to you and to anyone else listed as a driver on your policy.

If you or a passenger in your vehicle are hurt in an accident, medical payments or personal injury protection coverage can help pay any resulting medical bills. This type of coverage can also cover lost wages if you or an injured passenger are unable to work or funeral expenses if someone in your vehicle dies because of an accident.

While property damage liability insurance pays for damage to someone else's vehicle or property following an accident, collision coverage pays for damage to your own vehicle or property. That can include damages caused by a collision with another vehicle or hitting a stationary object, such as a tree or fence.

Preview

Auto Insurance Coverages Explained - Insurance Geek

Category: Auto Insurance

Auto insurance coverage has two types: liability coverages and physical damage coverages. Learn everything about these coverages and more!

All US states require some basic auto insurance coverage which lends financial protection if you are involved in a car accident if another driver causes damage to your vehicle or your property, or in case you damage someone else’s vehicle or property.

To make informed decisions about auto insurance coverages and to decide what best suits your needs, you need to be well-educated about the different types of coverages, what’s included and what isn’t, and of course, what’s optional and what’s mandatory.

Physical damage coverages, on the other hand, include collision, comprehensive, towing and labor, roadside a-sistance, and gap coverage. In case your car is leased, physical damage is required; if it’s fully paid, it becomes optional.

Auto liability insurance is there to protect you in case you cause an accident, and it is used to pay for the other person’s expenses, whether it is someone else’s property or injuries.

BI and PD liability are mandatory coverages required by each state. To be able to drive legally, you must carry at least the state minimum coverages. Liability limits are the maximum amount your policy can pay in case of an accident.

Preview

Split-Limit Car Insurance Explained | Progressive

Category: Limit Insurance Coverage Limit Car Insurance

What's split-limit car insurance, and how does it differ from a combined single-limit policy? Learn more to determine which is right for you.

Split-limit car insurance is defined as a policy that divides liability coverage into three separate limits for bodily injury per person, bodily injury per accident, and property damage per accident. Insurance companies often write these limits as three separate numbers.

Insurers typically offer a variety of liability limits for you to choose from. A commonly available choice of limits is $25,000/$50,000/$25,000, or 25/50/25. The three numbers represent the maximum amount your insurance will pay for bodily injury and property damage you cause. Keep in mind that bodily injuries often cost more than property damage, so it's worth considering higher limits for bodily injury.

Imagine you have liability coverage limits of 25/50/25. If you cause an accident, the other driver can file a claim with your insurance for up to $25,000 for their injuries alone. They can claim up to $50,000 in total for injuries they and anyone else involved in the accident have suffered, such as one of their passengers. They can also file a claim for damage to their vehicle for up to $25,000.

The minimum amount of required liability insurance coverage varies by state car insurance requirements. It's generally a good idea to carry higher limits, especially if the minimum limits required in your state aren't enough to cover your net worth. If you're at fault in an accident and your liability limits aren't high enough to cover all the damages, you could be responsible for paying the remainder yourself.

A split-limit policy breaks your bodily injury and property damage coverage limits into three separate components, while a combined single-limit policy merges them so you have one limit for both bodily injury and property damage. This amount usually falls between $300,000 and $500,000. It can be divided up in any way needed to cover bodily injuries and property damage claims following an accident.

Preview

Car Insurance Deductibles and Coverage Limits Explained

May 24, 2016 · Say you have a bodily injury liability limit with the amount of $25,000 per person/$50,000 per accident. The insurance will not pay any more than $25,000 to any one …

Preview

Car Insurance Coverage: Auto Coverage Types & More | GEICO

Category: Auto Insurance

You can choose the amount of protection by selecting your coverages and limits. An auto insurance policy can provide coverage for: Accidents; Liability; Medical expenses; Property; …

Preview

Automobile insurance guide - Texas Department of Insurance

May 6, 2021 · It also pays the other driver’s and his or her passenger’s medical bills and some other expenses. Texas law requires you to have at least $30,000 of coverage for injuries per …

Preview

New York State Auto Coverage Guide | NYCM Insurance

Not required. $200 deductible. Split Limit: Split limits restrict the maximum amount that a policy will pay for a specific type of loss, such as property damage and bodily injury. A split limit auto …

Preview