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What Are Auto Insurance Limits?

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:

  • Bodily injury limits. The insurer will set a limit on the amounts paid towards medical expenses, rehabilitation and/or funerals for people injured or killed in an accident where you are at fault. Insurers set a limit per injured or killed passenger and per accident.
  • Property damage limits. Property damage limits determine how much the insurer will pay towards reinstating material goods back to their previous state (or reimbursing the owner if repairing is no longer economically feasible). The insurer will cover other vehicles involved in an accident, as well as non-moving objects.

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).

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