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What is a Coverage Limit?

By August 8, 2022October 3rd, 2022Insurance
Having the correct coverage limits for you auto insurance is beneficial. Coverage limits determine what an insurance company will pay, this picture shows a car being fully covered through their insurance.

What is a Coverage Limit?

A coverage limit is the maximum amount your insurer will cover to pay your claim. If your claim exceeds the limit, you will be held responsible for paying the rest of your claim. Think of it as your coverage allowance. 

Example of A Coverage Limit:

If your coverage limit is $25,000, but your claim is $30,000, your insurer will pay the $25,000, but you will have to pay that $5,000 difference. 

If you do not have the right coverage limits, the difference will be your responsibility to pay. People do not realize that if you do not pay the difference, companies will start going after the assets you have. 

 

Many argue against higher coverage limits:

“I am a good driver, I’m not going to hit anyone….”

You may be a good driver, but accidents can always happen. 

*read more about the benefits of higher coverage limits*

Typical Car Insurance Coverages 

Property damage liability (PD)

Covers the costs of a claim or a lawsuit because of damage you caused in a car accident to another person’s property.

First Party Benefits/Personal injury protection (PIP) 

Protects you or other persons from the costs of injuries that occur in a car accident.

*Important: First-party benefits only protect the insureds and resident family members*  

Bodily injury liability (BI)

Covers the costs of a claim or a lawsuit where you injured other people because of an accident you caused. 

Uninsured/underinsured property damage

Covers costs of damages if an uninsured or underinsured driver harms your property. 

Uninsured/underinsured bodily injury 

Protects you from bearing injury costs if you are in an accident where an uninsured/underinsured driver is at fault. 

 

Coverage Limits Differ in Different Areas

Your residency determines your coverage limit and which coverages are required. States regulate car insurance, which means your coverage limit all depends on your residency. 

States have different requirements for the minimum coverage that their drivers must have, and you must be aware of your state’s requirements. 

 

Let’s take a look at three different states’ coverage limits: Pennsylvania, New Jersey, and Maryland.

 

Pennsylvania Coverage Limits

Pennsylvania requires its vehicle operators to have three coverages: Bodily injury liability, property damage, and first-party benefits. 

Minimum Coverage Limits: 

  • Bodily injury liability coverage: 
    • $15,000 per person
    • $30,000 per accident 
  • Property damage liability: 
    • $5,000 per accident
  •  First-party benefits:
    • $5,000 for medical benefits

 

*Note: A lawsuit may not be covered unless the insured has all the proper coverage limits.*

 

New Jersey Coverage Limits

New Jersey requires drivers to have the following coverages: Property Damage Liability, and Personal Injury Protection.

Minimum Coverage Limits:

  • Property Damage Liability 
    • $5,000 per accident 
  • Personal Injury Protection 
    • $15,000 per person or accident

 

Maryland Coverage Limits 

Maryland requires that all drivers have two coverages to legally operate a vehicle: Bodily Injury Liability & Property Damage Liability. 

Minimum Coverage Limits:

  • Bodily Injury Liability 
    • $30,000 for one person
    • $60,000 for two or more people
  • Uninsured/Underinsured Bodily Injury 
    • $30,000 for each person
    • $60,000 for each accident 
  • Uninsured/Underinsured Property Damage
    • $15,000
  • Property Damage Liability 
    • $15,000

 

Should you Only Have the Minimum Coverage?

It is important to note that having only the set minimum coverage could result in you having to pay more later on if an accident occurs. Just because you meet your state’s minimum does not mean you are properly keeping your wallet safe. Protect your finances by having coverage that is unique to your insurance needs. 

 

All in All 

If we did not include your state or you are looking into purchasing car insurance, contact one of our licensed insurance representatives today by clicking here. We can walk you through the steps to ensure you have the necessary car insurance.

The Satanoff Agency, located in Wayne, PA, is an independent insurance company based in 41 states across America, working to supply our customers with quality assistance and insurance. Our independent agents offer their services to help you as the customer get the unique coverage you need. To get quoted, all you have to do is click here, and one of our talented insurance agents will tailor a personalized plan to ensure you are protected.