Understanding Auto Insurance Policy Limits
Choose the right coverage amounts to protect your financial future
What Are Insurance Policy Limits?
Policy limits are the maximum amount your insurance company will pay for a covered claim. Choosing the right limits is crucial - too low and you could face financial ruin after an accident, too high and you're paying for coverage you may not need. Let's break down how policy limits work and how to choose the right amounts.
Understanding Liability Limit Numbers
Decoding the Numbers: 100/300/100
You'll often see liability limits expressed as three numbers like 100/300/100 or 25/50/25. Here's what they mean (in thousands of dollars):
Bodily Injury Per Person
$100,000
Maximum paid for injuries to one person in an accident
Bodily Injury Per Accident
$300,000
Maximum paid for all injuries in a single accident
Property Damage
$100,000
Maximum paid for property damage in an accident
Common Liability Limit Options
- State Minimums: 25/50/25 or 15/30/10 (varies by state)
- Low Coverage: 50/100/50
- Medium Coverage: 100/300/100 (recommended for most)
- High Coverage: 250/500/250
- Maximum Coverage: 500/500/500 or higher
Real-World Example
Scenario: You cause an accident injuring 3 people with 100/300/100 coverage:
- Person 1 has $150,000 in medical bills → Insurance pays $100,000, you pay $50,000
- Person 2 has $80,000 in medical bills → Insurance pays $80,000
- Person 3 has $70,000 in medical bills → Insurance pays $70,000
- Total paid: $250,000 (under $300,000 per-accident limit)
Result: You're personally liable for $50,000 to Person 1.
Recommended Policy Limits by Situation
Minimum Protection
50/100/50
Suitable for:
- Limited assets to protect
- Very tight budget
- Older vehicle
- Low annual mileage
⚠️ Risk: May not be enough in serious accidents
Get QuoteStandard Protection
100/300/100
Recommended for:
- Most drivers
- Homeowners
- Moderate assets
- Family with dependents
✓ Good balance of protection and cost
Get QuotePremium Protection
250/500/250 or higher
Best for:
- High net worth individuals
- Business owners
- Multiple properties
- Significant investments
✓ Maximum financial protection
Get QuoteOther Important Coverage Limits
Uninsured/Underinsured Motorist Limits
Should match your liability limits to ensure full protection when hit by an uninsured driver.
- Typical limits: Match liability (100/300)
- Protects your medical expenses
- Covers hit-and-run accidents
- Essential - 1 in 8 drivers uninsured
Medical Payments / PIP Limits
Coverage for medical expenses regardless of fault. Consider your health insurance when choosing limits.
- Common limits: $1,000 - $10,000
- $5,000 typical for most drivers
- Higher if you have passengers regularly
- Can supplement health insurance
Comprehensive & Collision Deductibles
The amount you pay before insurance kicks in. Higher deductible = lower premium.
- Common deductibles: $250, $500, $1,000
- $500 is most common choice
- Choose what you can afford to pay
- Higher deductible saves on premiums
Rental Reimbursement Limits
Daily limits for rental car coverage while your vehicle is being repaired.
- Typical limits: $30-$75 per day
- Duration: 15-30 days maximum
- $50/day suitable for most
- Consider luxury car needs
How to Determine Your Ideal Limits
Assess Your Assets
Your liability limits should be high enough to protect your assets from lawsuits.
- Home equity
- Savings and investments
- Retirement accounts
- Future earnings potential
Consider Your Situation
Your family situation and lifestyle affect your coverage needs.
- Number of drivers in household
- Frequency of teen drivers
- Miles driven annually
- Types of roads (highway vs. city)
Understand Your Risk
Some situations create higher liability exposure.
- Business use of vehicle
- Long commute in traffic
- Inexperienced drivers
- High-value vehicle ownership
Consider Umbrella Insurance for Extra Protection
If you have significant assets to protect, an umbrella policy provides additional liability coverage beyond your auto insurance limits.
- Typically $1-5 million in coverage
- Covers multiple policies (auto, home)
- Relatively inexpensive ($150-$300/year)
- Protects against lawsuits
Who Needs Umbrella Insurance?
- Homeowners with equity
- High-income earners
- Business owners
- Anyone with substantial assets
- Those at higher risk of lawsuits
Find the Right Coverage Limits for Your Needs
Get personalized quotes with recommended limits based on your situation