Understanding Auto Policy Liability Limits is not that difficult. Here’s what they really mean and how they impact you. When you buy auto insurance, one of the most important decisions you make is
choosing your liability limits.
These numbers don’t just affect your premium, they determine how financially protected you are if you cause an accident. Yet many drivers select limits without fully understanding what they mean.
Let’s break it down so you can make a confident, informed choice.
What Are Liability Limits?
Liability coverage on your personal auto policy pays for injuries and property damage
you cause to others in an at-fault accident. It does not cover your own injuries or your
own vehicle.
Liability limits are usually shown as three numbers, for example:
100/300/100
Here’s what each number represents:
- $100,000 — maximum paid for bodily injury per person
- $300,000 — maximum paid for bodily injury per accident
- $100,000 — maximum paid for property damage per accident
- State Minimum vs. Recommended Coverage
Every state requires minimum liability limits, but minimum does not mean adequate.
Minimum limits are designed to:
- Get drivers legally on the road
- Keep premiums low
- They are not designed to fully protect your assets.
Many insurance professionals recommend at least:
- 100/300/100 for most drivers
- Higher limits if you own a home, have savings, or have significant income
