(800) 253-1482What Are Insurance Limits? – Auto and Home
Summary: Insurance policy limits determine the maximum coverage for home and auto policies. Auto insurance limits vary by state and may be required by law or lenders. Home insurance limits depend on factors like dwelling value and personal property coverage. Liability limits protect against legal claims, and additional coverage like umbrella policies can offer extra protection. Choosing the right limits helps avoid financial risks. Compare policies to find the best coverage at the lowest cost. Estimated Read Time: 6 mins
When you enroll with a carrier, your policy outlines the maximum amount of coverage provided—these are known as your insurance limits.
No matter what type of policy you have, such as a home or auto, you’re going to have a limit to how much protection is available.
Of course, you can adjust these limits lower or higher to meet your needs and add on additional coverage when needed.
However, higher coverage limits typically lead to higher insurance rates, and not all coverages allow limit adjustments.
Still, everyone needs to have an appropriate level of coverage, as claims exceeding your coverage limits may leave you responsible for the remaining expenses.
Auto Insurance Limits
Auto insurance limits are one of the most important to consider as they are tied to a few additional factors outside of your needs:
- Except for New Hampshire, every state requires minimum liability auto insurance limits to be met to be on the road legally.
- Suppose you are leasing your vehicle or purchasing your vehicle through a loan. In that case, you’re likely going to have to maintain certain coverages and limits as a term and condition of your agreement.
Car insurance liability limits can be adjusted but the minimum coverage is still required when driving on the road.
Each state has different limits of liability insurance, here’s how a few key states break down:
Texas
Texas minimum auto insurance requirements dictate that drivers maintain at least $30,000 worth of bodily injury liability coverage per person with a total of $60,000 per accident and $25,000 worth of property damage liability coverage per accident.
Missouri
Missouri auto insurance requirements mandate every driver has a minimum of $25,000 worth of bodily injury coverage per person, with $50,000 in total per accident, as well as $25,000 worth of property damage liability coverage per accident.
Tennessee
Tennessee auto insurance requirements mean drivers must maintain minimum liability coverage limits of $25,000 in bodily injury coverage per person, totaling $50,000 per accident, and $25,000 in property damage coverage.
Colorado
Colorado auto insurance requirements to stay legal on the road means drivers must have $25,000 in coverage for bodily injury or death to any one person, totaling $50,000 per accident. Furthermore, you must have $15,000 in coverage dedicated to property damage per accident.
Note: Don’t see your state listed? No worries. Check out our full list of minimum car insurance liability requirements by state by clicking the link.
Other Car Insurance Limits for Drivers
Drivers have many different coverage options for their auto insurance, however, the limits are mostly up to your discretion.
For example, if you want to enroll in comprehensive coverage, you’ll be able to choose your insurance limits depending on your needs without hitting a legally required minimum.
However, there are some exceptions, such as when you enroll in full coverage auto insurance because you are financing your vehicle. Your lender will likely set a specific minimum coverage limit in this case.
Furthermore, some states require mandatory coverages beyond just liability, which means you’ll also need to meet these insurance limits as well to remain legal:
UM BI Coverage Limits in Missouri
Uninsured motorist bodily injury is mandatory in Missouri, where each driver must maintain at least $25,000 worth of coverage per person and $50,000 per accident in addition to their liability policy.
Personal Injury Protection (PIP) Insurance
PIP coverage isn’t available everywhere and in many states, it may be optional. However, the following states have minimum insurance limits for PIP policies:
- Delaware
- Florida
- Hawaii
- Kansas
- Kentucky
- Maryland
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Oregon
- Pennsylvania
- Puerto Rico*
- Utah
*U.S. territory
Home Insurance Coverage Limits
Insurance limits work a little differently for homeowners policies than they do when you’re protecting your vehicle.
For example, there isn’t a legal requirement for home insurance, however, you’re going to likely be required to have minimum coverage limits if you have a mortgage by your lender.
Depending on where you live, you may also be required to have certain types of coverage. For example, many Texans living near the Gulf Coast are required to have windstorm protection.
Your home insurance policy consists of many different coverages and how you protect yourself will differ for everyone.
What this may look like is a larger home having higher dwelling coverage limits than a smaller one, or someone with a higher risk towards their personal property increasing these limits for personalized protection.
Overall, your home insurance limits should meet your protection needs and budget, regardless of whether or not the law mandates such coverage, whether you have a mortgage or not, or any other variable.
Dwelling Coverage Limits
Mortgage lenders often require your home insurance to include enough dwelling coverage to match your loan amount.
Insurers may set this limit based on your home's replacement cost, considering factors like age, size, and features.
If you can choose your coverage, estimate rebuilding costs and select coverage accordingly.
Additionally, coverage for other structures is typically a percentage of your dwelling limits.
Therefore, the limits you set here will have an effect on other portions of your policy.
Your dwelling coverage insurance limits will be the bulk of your policy and all homeowners need to adjust as necessary to protect themselves financially from a major or total loss.
Personal Property Limits
Your dwelling coverage limits also affect how much protection you have on your personal belongings.
Normally, personal property coverage is usually 50% of your dwelling limit but it can be adjusted. Some items, like jewelry and firearms, have sub-limits.
However, to fully cover valuable items, consider adding a rider (endorsement) for even more protection.
Personal Liability Limits
Homeowners' personal liability coverage can help cover costs if they or a family member are responsible for someone’s injury or property damage.
Policyholders usually choose from limits of $100,000, $300,000, or $500,000, which apply to covered claims where they are legally responsible.
Liability is complex and it’s important to set the right insurance limits to avoid exposing your finances and assets to lawsuits.
If you do have elevated risks or just want to better protect yourself, umbrella insurance policies may be an important consideration.
With that said, keep in mind the insurance limits you set on liability coverage for your home and auto policies will need to reach a certain threshold in order to qualify for enrolling in an umbrella policy.
How to Find Insurance Policy Limits
Finding the limits of your policy is easier than you might think. They are usually found on the declarations page, which for most policies, is the first page of your document.
This page provides essential details, including coverage types, policy period, limits, and the insured's name.
Increase Your Insurance Policy Limits for Less
Helping Texas, Colorado, Missouri, and Tennessee protect themselves from potential financial losses is what Freedom Insurance Group does best.
We understand the importance of having the right level of coverage for peace of mind and to help you restore your life after a loss.
By working with multiple top-rated carriers, our agents help you find the best possible coverage at the lowest possible price to meet your needs while saving you more.
To get started, ask an agent to discuss your insurance limits by clicking the link or calling the number above. You can also compare quotes for home and auto policies at the top of this page in just a few clicks.
