When it comes to auto insurance, it’s easy to focus on one thing: the price. But your coverage limits are just as important.

Your coverage limits determine the maximum amount your insurance policy will pay for certain covered losses. If the costs of an accident exceed your limits, you may be responsible for paying the difference out of pocket.

That’s why understanding your limits—and reviewing them regularly—is so important.

What Do Your Auto Policy Limits Cover?

Liability Coverage

Liability coverage helps protect you when you are legally responsible for an accident that causes injury to another person or damage to someone else’s property.

It includes:

Bodily Injury Liability – Helps pay for covered expenses when you injure someone in an accident, such as medical bills, lost wages, and other damages.

Property Damage Liability – Helps pay for damage you cause to another person’s vehicle or property.

You may see liability limits written as 100/300/50. Generally, this means:

  • $100,000 per person for bodily injury
  • $300,000 total per accident for bodily injury
  • $50,000 per accident for property damage

Why Do Liability Limits Matter?

Imagine you cause an accident that injures three people. Each person has $25,000 in covered damages.

That’s $75,000 total, but if your bodily injury limits are $25,000 per person/$50,000 per accident, your insurance may only pay up to $50,000. You could be responsible for the remaining $25,000.

If the other vehicle also has $30,000 in damage and your property damage limit is $25,000, you could owe another $5,000.

In this example, you could potentially be responsible for $30,000 out of pocket.

Uninsured & Underinsured Motorist Coverage

Not every driver on the road has enough insurance—or any insurance at all.

Uninsured Motorist Coverage may help protect you when you’re injured in an accident caused by a driver who doesn’t have insurance.

Underinsured Motorist Coverage may help when the at-fault driver has insurance, but their limits aren’t enough to cover your damages.

These coverages can provide an important layer of protection if you’re involved in an accident with someone who doesn’t carry adequate insurance.

Collision & Comprehensive Coverage

While liability coverage helps protect you from damages you cause to others, collision and comprehensive coverage help protect your vehicle.

Collision Coverage may help pay for damage to your vehicle from:

  • A collision with another vehicle
  • Hitting an object
  • A single-car accident
  • A rollover

Comprehensive Coverage may help pay for non-collision damage such as:

  • Theft
  • Vandalism
  • Fire
  • Animal strikes
  • Falling objects
  • Certain weather-related damage

Both typically have a deductible, such as $250, $500, or $1,000. A higher deductible may lower your premium, but you’ll pay more out of pocket if you have a covered claim.

How Do Your Limits Affect Your Premium?

Generally, higher coverage limits mean a higher premium, while lower limits may reduce your premium.

The same is true for deductibles: choosing a higher deductible can often lower your premium because you’re taking on more of the financial risk.

But saving money on your premium isn’t always worth taking on significantly more risk.

Ask yourself: “If I had a serious accident tomorrow, how much could I realistically afford to pay out of pocket?”

When Should You Review Your Limits?

Your insurance needs can change as your life changes.

It’s a good idea to review your auto policy every 6–12 months, especially after major life events such as:

  • Buying or selling a vehicle
  • Moving
  • Getting married
  • Adding a driver
  • Changes in your financial situation
  • Purchasing a home or other significant assets

Don’t Just Ask, “How Much Is My Insurance?”

Ask:

“How much protection do I actually have?”

The right coverage isn’t necessarily the cheapest coverage. It’s coverage that makes sense for your situation, your finances, and the level of risk you’re comfortable taking.

We understand this can be confusing, and we are here to help!

Coverage availability, limits, exclusions, and requirements vary by state and individual policy. This article is for general informational purposes and is not a substitute for reviewing your specific policy with a licensed insurance professional.