Coverage limits are the maximum amounts the insurers bind themselves to pay upon the occurrence of the insured event. The limits have a direct influence on your premium value – the higher the limits are, the more you will be billed. If you are at fault in an accident and the damages are above the covered threshold you will be liable for the difference.
Two types of insurance limits are worth mentioning:
Most states have set minimum insurance limits based on settlement statistics from the previous years. Driving with insurance limits below the legal threshold could lead to hefty fines and even loss of driving privileges, not to mention the financial responsibility if you are involved in a traffic accident.
As of the end of 2011, Wisconsin has the highest minimum requirements (50/100/55 i.e. $50,000 per injured passenger but not more than $100,000 and $55,000 for property damage) and Florida the lowest (10/20/10).