What Are Auto Insurance Coverage Limits?

When you purchase an auto insurance policy, you should carefully consider your policy limits. Coverage limits determine how much financial protection your policy provides.

Definition

An auto insurance coverage limit is the most a policy coverage will pay if you are involved in a motor vehicle accident.

Per-Person Limits

A per-person limit is the amount a coverage will pay for one person's damages, regardless of whether the person's actual damages exceed that limit.

Per-Accident Limits

A per-accident limit is the most a policy will pay for damages incurred by more than one person. If the total of all damages exceeds the per accident limit, the payment is typically divided equally among all claimants.

Per Occurrence Limits

Coverages such as rental car coverage may have both a dollar limit and a time limit. For example, a policy might pay $40 a day for up to 30 days for a policyholder to rent a car while his vehicle is in a repair shop.

Other Insurance

Coverage limits may be reduced if there is another policy that provides coverage for the same loss, such as a health insurance policy.

References

• Insure.com: Car Insurance Basics