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A coverage limit is the amount an insurance company pays for an approved claim. A policyholder usually selects the limit amount. However, the higher the limit, the higher the coverage cost. Federal and state limits will determine maximum amounts, as will a policyholder’s driving and financial records. Continue reading to learn about the most common auto insurance limits and other essential terms.
Injury Expenses
Choosing the limited amounts set by your state or policy provider is best, as these amounts will generally protect you financially. However, you may want to set them higher than your current cash flow and assets.
For example, if your net worth is $80,000 and an accident leads to $20,000 in medical bills, you want your car insurance to cover those expenses instead of digging into your savings. Therefore, select a policy that covers up to $50,000 in bodily injury and at least up to $100,000 for the total accident. Doing so could ensure your coverage is well above the claim amount and reduce the risk of spending your savings.
Property Damage
Besides bodily injury limits, you need to select an amount for property damage you could be required to pay. The common amount for property damage is at least $25,000 per accident. However, many policyholders generally select an amount higher than the state requirement.
This applies to any repairs, replacements, and property damage you deal with because of an auto accident. This could include a tree, office building, store, or residential home as well as a vehicle. Setting an appropriate limit allows most, if not all, of the damage costs to be covered.
Uninsured & Underinsured Motorists
While you may meet insurance requirements, not every driver does. The expenses incurred because of an accident need to be covered regardless of the circumstances. Therefore, having uninsured and underinsured motorist coverage is another option to consider.
The limit amounts vary from state to state. For instance, California’s minimum requirement for this coverage is $15,000 for bodily injury or death per person and $30,000 for total bodily injury or death per accident. However, Georgia’s limit for uninsured and underinsured motor coverage limits is $25,000 per person and $50,000 per accident.
How to Select the Best Limits
Although liability coverage is the most sought after, many people take it higher and get comprehensive and collision coverage, personal injury protection, medical payments, and other policy types. These selections can cover situations outside your control, regardless of whether you lease your automobile or own it.
California has its own coverage requirements, so make sure to go over those factors. With some coverage types, you can reject an amount altogether or choose a lower coverage limit. This will vary from policy to policy, so verify before making a decision.
Speak with a reputable insurance company to make the process less challenging and thoroughly understand your available options. These professionals can explain the coverage, particularly limit amounts, and what suits you best.
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.