Understanding Auto Insurance Coverage Limits

Auto insurance is a lifesaver when you experience an accident that causes property damage and personal injuries. If you’ve ever been in even a minor fender bender, then you know how quickly the costs can add up. While auto insurance policies can pay out thousands of dollars in compensation for covered accidents, there’s a limit to how much you can expect a company to cover. Taking a look at how coverage limits can vary among auto insurance policies helps you make an informed choice when you purchase a policy for your vehicle.

Understanding Liability Coverage Limits

Every state requires vehicle owners to have liability insurance. This type of insurance isn’t intended to help you fix your car after an accident. Instead, it’s designed to help other drivers and pedestrians who might have been caught up in an accident through no fault of their own. Liability coverage pays for property damage and medical costs along with other damages you’re legally obligated to cover when you’re determined to be at fault.

Typically, liability insurance coverage limits are presented in three parts. The first number you see tells you how much coverage there is per person for bodily injuries in an accident. The second number is the total limit per accident for bodily injuries, since there could be multiple people injured. The final number is the total limit of coverage for property damage.

Checking the Limits for Collision Insurance

Collision auto insurance is an optional type of coverage you can get to help with paying for the cost of damage to your car after a collision with another vehicle or object. For instance, you can get coverage for single-vehicle incidents, such as backing your car into a utility pole. Typically, the coverage limit for this type of car insurance will stop at the determined actual cash value (ACV) of your vehicle. This type of coverage also has a deductible you’ll need to pay before the insurance kicks in.

Knowing What to Expect with Comprehensive Coverage

Comprehensive auto insurance provides even further financial assistance in the event of serious vehicle damage. Since this covers scenarios such as vandalism and objects falling on your car, auto loan providers tend to require borrowers to purchase comprehensive policies that also cover collisions. You’ll sometimes hear people refer to this as full coverage insurance, and the typical limit will be the ACV of the car.

Making Sure to Review Coverage Limits Periodically

Considering how quickly life can change, it’s best to check the coverage limits on your policies during each renewal period. With liability insurance, you must typically accept certain coverage limits to comply with local laws. But you may prefer a higher coverage limit than the bare minimum if you’re at higher risk for serious accidents.

Alternatively, you might opt to lower your coverage limit on an older car that no longer has to meet a lender’s requirements. Striking the right balance between having good coverage and maintaining an affordable premium takes work and help from your insurance agent, but it’s worth feeling secure after an accident. 

Drivers who are searching for reliable, affordable auto insurance should reach out to the experienced professionals at Altra Insurance Services. In addition to auto coverage, we offer a variety of insurance policies, including motorcycle, homeowners, and business insurance. San Diego residents can call one of our friendly agents today for a free quote.