What are Car Insurance Limits and Coverages?

Do you know the minimum auto insurance coverage limits for your state? Most of us pay little attention to the finer points of our auto policies — that is until something happens and we need to file a claim. Your financial security depends on you having a basic understanding of your coverages and their limits, so we’ve unpacked some key points to focus on, including how to select coverage limits and we’ll preview the changes coming to California in 2025.

The Significance of Auto Insurance Limits

At its most basic, auto insurance helps to pay bills related to car accidents. The auto insurance limits shown on your policy docs dictate how much the policy will pay toward the various expenses, such as property damage, medical bills, and legal fees. State laws mandate minimum car insurance limits your policy must provide to drive legally on their roads and highways. Drivers can increase these policy limits to ensure they’re fully protected. They can also cut these limits to the legal minimum to save a bit on insurance premiums, but that’s not recommended, as we explain below.

Car Insurance Limits Explained

Auto insurance coverage limits are typically expressed as three numbers, such as 100/300/50. The first number (in this case, 100) represents the bodily injury liability limit per person. For someone with car insurance limits of 100/300/50, the insurance company pays up to $100,000 in medical costs for each person injured in an accident caused by the policyholder. This includes the other driver, passengers in either vehicle, and any pedestrians injured in the accident. Costs beyond the $100,000 must be paid out of pocket. It’s worth noting that bodily injury liability coverage does not pay for the policyholder’s medical expenses. The policyholder’s property damage is handled under other coverage in the policy.

The second number in the auto insurance coverage limits refers to the bodily injury liability per incident or the most the insurer will pay for bodily injury when their policyholder causes an accident. Using the example above, the insurance company pays up to $300,000 of coverage for everyone injured in the crash. If more than three people need the maximum coverage to treat their injuries, the policyholder will be responsible for paying the remainder of the damages out of pocket.

The third number refers to the total property damage liability that a policy will cover. For the policyholder with 100/300/50 auto insurance limits, $50,000 is available to cover repairs for any property damaged by the policyholder in the accident. This includes damage to vehicles, fences, buildings, street signs, etc. However, property damage liability does not include coverage for the policyholder’s own property, which would require separate coverage.

Factors Influencing Auto Coverage Limits

As the policyholder, you can adjust your auto insurance coverage limits. Three fundamental factors guide car insurance limits:

• State Requirements: Different states mandate different minimum auto insurance limits. States seek to protect at-fault drivers from crippling financial liabilities and victims from facing vast uncompensated losses.
• Insurance Company Policies: Insurance providers charge different rates for different coverage limits. They want to provide valuable protection without losing too much money on the payouts they make.
• Personal Finances and Risk Tolerance: Cash-strapped policyholders often fixate on the minimum legal auto insurance coverage limits as a way to lower monthly bills. However, doing so leaves them vulnerable to enormous debt in the event of an accident.

Exploring Coverage Types

Optional car insurance coverages you should be aware of and consider adding to your policy include:

• Collision Coverage: This coverage pays for repairing or replacing your vehicle if it’s damaged in a collision with another car or object, such as a fence or tree, regardless of who is at fault.
• Comprehensive Coverage: This protects your car from damage caused outside of a collision, such as theft, vandalism, fire, natural disasters, or animals.
• Uninsured/Underinsured Motorist Coverage: If you’re in an accident with an uninsured or underinsured motorist, this coverage can pay your medical expenses, lost wages, vehicle repairs, and other related costs up to the car insurance limits.
• Additional Coverage Options: Your car insurance policy can be customized to include roadside assistance, rental car reimbursement, medical payments, and other types of coverage you might want.

Get details about all forms of coverage available through Wawanesa.

Evaluating and Choosing Coverage Limits

With auto insurance coverage limits explained, are you curious about what your policy covers and the changes you can make? It’s wise to review your car insurance policy periodically since certain life events can affect your coverage needs.

Some of the reasons why you might make changes to your auto insurance policy include:

• Adding a new driver
• Buying a new car
• Updating your marital status
• A change in the amount of driving you do

While changing your policy, take some time to evaluate your coverage.

When evaluating and changing your auto insurance coverage limits, consider your financial circumstances and assets carefully. If you own a home or have other assets, they may be liquidated to cover your liability if you cause an accident and are underinsured. Sometimes, the difference between legally mandated car insurance limits and quality coverage is just the cost of a couple of lattes. Skipping coffee can help reduce your waistline, while skipping better coverage can reduce your financial security — in a hurry. Don’t let a simple driving mistake cost you everything you own.

Consult your friendly Wawanesa agent to review and adjust your auto insurance limits.

How Are California Auto Insurance Limits Changing in 2025?

California has more licensed drivers on the road than any other state. They have also had among the lowest auto insurance coverage limits in the country. That’s about to change.

Under current law, established in 1967, California drivers must carry insurance with minimum limits of 15/30/5, or:

• $15,000 for bodily injury or death per person
• $30,000 for bodily injury or death per accident
• $5,000 for property damage per accident

Senate Bill 1107 increases California’s required car insurance limits to:

• $30,000 for bodily injury or death per person
• $60,000 for bodily injury or death per accident
• $15,000 for property damage per accident

These new coverage limits go into effect January 1, 2025, and will remain in effect for 10 years. In 2035, the auto insurance coverage minimum limits will rise again to:

• $50,000 for bodily injury or death per person
• $100,000 for bodily injury or death per accident
• $25,000 for property damage per accident

All California drivers should review their insurance policy well before the coverage limit increases take effect. While you want your policy to cover you legally in case you get pulled over, you need to know that the coverage limits you choose will protect your financial future.

Get an Auto Quote Now

Are you properly insured? In a worst-case scenario, will your current auto insurance coverage limits adequately cover you? We hope you now have a clearer picture of how coverage limits work. If you still have questions about your current policy, speak with a helpful customer service agent and get the answers you need.

An insurance professional can provide the most up-to-date information about Wawanesa policies and coverage options. If you’re looking for better coverage and lower rates, get a free quote today to see how Wawanesa can help.